Motilal Oswal - Axis Bank Limited (AXISBANK) MOSL: AXIS BANK (Buy)-Annual Report-Strategy + Team in place-execution remains the key

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Motilal Oswal

Nitin Aggarwal

EUR 120.00 For Business Accounts Only

MOSL: AXIS BANK (Buy)-Annual Report-Strategy + Team in place-execution remains the key

AXIS BANK (Annual Report): Strategy + Team in place; execution remains the key; Operating metrics to improve gradually; estimate FY21 RoA at ~1.4%

(AXSB IN, Mkt Cap USD29.5b, CMP INR782, TP INR925, 18% Upside, Buy)

Axis Bank's (AXSB) annual report analysis reveals the bank's focus on improving its earnings metrics and asset quality. As part of its FY20-22 strategy, AXSB targets an RoE of 18% by FY22, with credit cost, opex and business mix identified as the key drivers for the achievement of this goal.
Digital initiatives at the bank are gaining traction, with 43% of its personal loans sourced digitally versus 22% in FY18. Also, the bank's market share in credit cards expanded to 12.4% from 5% in FY13, helping it become the fourth largest credit card issuer in the country.
The concentration in top 20 advances/exposures improved by 171bp/86bp YoY to 8.6%/12.4% in FY19. However, on the liability side, the concentration of top-20 depositors increased by 39bp YoY to 11.8%. The bank has shifted its deposit strategy away from CASA to 'CASA + retail term deposits'.
Though the bank has strong management team and a well-articulated strategy in place the execution is going to be critical to deliver long-term sustainable growth and earnings. NPL cycle has shown improvement signs and we estimate earnings to recover though credit cost trajectory can still remain uneven given sluggish macro. We thus estimate RoA/RoE to improve to 1.4%/17.0% by FY21 and maintain our Buy rating with a TP of INR925 (2.7x FY21E ABV + INR42 for subsidiaries).

26/06/2019 1 EN

Underlying

Axis Bank Limited

Axis Bank is a consumer and corporate bank engaged in operations in India. Co. maintains activities in both retail and corporate banking. Co. is also active as a mutual fund in the Indian capital market. Co., through its servicing and distribution network provides a complete range of services to its investors. As of March 31, 2011, Co. operated 1,390 branches and extension counters, as well as a network of approximately 6,270 ATMs. Co. also has branches in Singapore, Hong Kong, Shanghai, the UAE, and Sri Lanka. Co. provides services in consumer and corporate banking, NRIs, Retail loans, treasury services, Capital market services and Financial Advisory services.

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INE238A01034 National Stock Exchange of India India

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Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Nitin Aggarwal

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MOSL: AXIS BANK (Buy)-Annual Report-Strategy + Team in place-execution remains the key

Int'l Macro Vision: Sector Synopsis

MOSL : AXIS BANK: Exemplary performance; margins take a giant leap

AXIS BANK with less fundamental stars is reduced to Neutral

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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