Axis Bank Q1 Review - Placed As The Top Pick In May 2022, Investment Thesis Remains Intact: Yes Securities

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Yes Securities Report.While cost of deposits would continue to rise for Axis Bank Ltd., structural factors aiding margin continue to remain at play: Three basis points of the sequential decline in net interest margin was attributable to the lack of interest on income tax refund in Q1. The remaining 9 bps was attributable, as such, to business as usual reasons. Cost of deposits has risen 31 bps QoQ to 4.64%. The rise in cost of deposits was materially offset by a rise in yield on advances. Share of loans and investments stood at 88% of total assets, up 113 bps QoQ. Share of Indian rupee book stood at 95.6% of total loan book, up 70 bps QoQ. Share of retail and consumer banking group loans was 68% of advances. Share of rural infrastructure development fund assets has declined from 3.58% of total assets a year ago to 2.29% as of June 2023.Operating expenses have risen materially but that is largely along expected lines: There were three key underlying reasons for the rapid sequential rise in staff expenses. Increments have been offered in the June quarter. 8366 people have been added over the past 12 months and there has been a sequential rise as well. There was also a marginal impact on gratuity due to interest rate movement. It may further be noted that for Q4, the Citi business expenses were accounted for only the final month of March. In general, the Citi business is entirely retail and a higher opex business. We reiterate 'Buy' rating on Axis Bank with a revised price target of Rs 1300: We had placed Axis Bank as the very top pick for the first time in our report dated May 2022. We value the standalone bank at 1.9 times FY25 price/book value for an FY24E/25E/26E return on equity profile of 18.1%/17.9%/17.3%. We assign a value of Rs 121 per share to the subsidiaries, on SOTP..Result HighlightsAsset quality: Gross slippages amounted to Rs 39.9 billion (annualised slippage ratio of 1.9%) and recoveries and upgrades were healthy at Rs 23.05 billion.Margin picture: NIM at 4.10% was down -12 bps QoQ, where the unfavorable impact of -5 bps was due to fall in spreads and -4 bps due to interest reversals.Asset growth: Advances grew 1.6%/22.4% QoQ/YoY driven sequentially by large and mid-corporate loans and by few segments in retail loans.Opex control: Total opex rose 10%/26.7% QoQ/YoY, employee expense rose 24.3%/23% QoQ/YoY and other expenses rose 4.5%/28.6% QoQ/YoY.Fee income: Fees income fell/grew -4%/25.5% QoQ/YoY, where retail banking fees de-grew/grew -2.5%/32.5% QoQ/YoY..Click on the attachment to read the full report:.Axis Bank Q1 Results Review - Focus On Profitability, Business Investments: Prabhudas Lilladher.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Axis Bank Q1 Review - Placed As The Top Pick In May 2022, Investment Thesis Remains Intact: Yes Securities

Operating expenses have risen materially but that is largely along expected lines.

NDTV Profit

NDTV Profit

Follow Us

DOWNLOAD THE APP