MOSL: MOrning India (26/July/22): 1. Axis Bank (Loan growth muted; lower provisions drive earnings beat); 2. Infosys; 3. Tata Steel; 4. Tech Mahindra; 5. Macrotech Devel. 6. Canara Bank
Today’s top research idea
Axis Bank: Loan growth muted; lower provisions drive earnings beat
- AXSB reported a PAT of INR41.2b (up 91% YoY, 20% beat), driven largely by lower provisions, which fell 89% YoY, while NII/PPOP stood in line. OPEX remains elevated as the bank is investing in the business and technology.
- Business growth was muted, with loans and deposits down sequentially. The Corporate and SME book saw a QoQ decline, while the Retail segment saw a growth of 3% QoQ.
- Fresh slippages fell to INR36.8b, which, coupled with healthy recoveries and upgrades, enabled an improvement in asset quality ratios. The restructuring book remains controlled at 0.45%, which, along with an additional provision buffer, should rein in credit cost. We expect AXSB to deliver a RoA/RoE of 1.6%/16.7% in FY24E. We maintain our Buy rating.
Piping hot news
Government sets target to raise share of natural gas in energy mix to 15% by 2030
The government on Monday announced it has set a target to raise the share of natural gas in the energy mix to 15%, from 6.3% currently, in 2030, stated a press release. According to the data revealed by the Ministry of Petroleum & Natural Gas, a total of 95.21 lakh PNG (Domestic) connections have been provided and 4531 CNG (Transport) stations have been established by the authorized entities as on 31 May, 2022. After completion of 11A city gas distribution (CGD) round, 295 Geographical Areas (GAs) have been authorized which inter alia covers 98% of India’s population and 88% of its GAs.
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