Axis Bank Target Price: 25% Upside Seen As Morgan Stanley Initiates 'Buy' — Details Inside

Morgan Stanley has raised its target price on Axis Bank Ltd., citing the turnaround story as the bank has take significant additional steps over the past year and should get traction as the macro climate improves.

In its latest note, Morgan Stanley has raised its target price to Rs 1,450 from Rs 1,325 while maintaining an 'overweight' rating on the scrip. The stock is currently trading Rs 1,161.40.

The brokerage noted that, the bank should get traction as the macro climate improves. "Expect re-rating relative to large private banks to be gradual," it added.

Morgan Stanley further added that, "Expect trends in all three drivers – i.e., NIMs, growth, and credit costs – to turn positive."

The brokerage highlighted that, the extent will be linked to the pace of macro recovery. "Benefits of the bank's strategic decisions could be visible over the next 2-3 years. But until then, expect the valuation gap to remain wide," it added.

Key drivers for structural re-rating will be narrowing of retail deposit growth differentials and loan spreads versus large banks.

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