Axis Bank Q2 Review — Healthy Quarter Despite One-Time Provisioning Impact; Dolat Capital Maintains 'Add'

Trading at 1.5x Sep-27E P/ABV (RoA/RoE of 1.7%/15%), valuations are undemanding for a large bank like Axis. Dolat Capital believes consistency on core metrics would be key to narrowing the valuation gap vs peers. Credit costs are nonetheless settling at relatively higher levels vs peers. With contingent provision buffers at ~40 bps, impact on net-worth from the recent ECL circular is expected to be negligible..NDTV Profit’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 NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Dolat Capital Report.Axis Bank Ltd. reported a good quarter with strong loan growth at 5% QoQ, limited net interest margin contraction at 7 bps QoQ (to 3.73%), and contained NPA related credit costs at 75 bps. Overall provisions at 130 bps were, however, impacted by priority sector lending declassification of ~Rs 240 bsillion of loans, resulting Rs 12 billion or 5% additional one-time standard provisions. This, along with the PSLC purchase to compensate for the above declassification resulted in a sharp PAT miss with RoA of 1.24%. Advances growth at 5% QoQ was led by sharp sequential growth in corporate (+11%), and SME (+9%) portfolios. NIM is guided to bottom in Q3, assuming no further rate cuts. Opex optimization to continue despite additional PSLC costs coming in (Rs 4.8 billion in Q2 and 2.4 billion over the next two quarters). Asset quality trends are improving in the cards book and stabilizing for the PL and MFI portfolio. We tweak our estimates, after factoring one-time provision impact. Maintain ‘Accumulate’ rating with revised target price of Rs 1330, valuing the bank at 1.7x Sep-27E P/ABV against RoA/RoE of 1.7%/15%. We look for consistency in growth and asset quality trends for a stronger stance..Click on the attachment to read the full report:.Axis Bank Q2 Review: Motilal Oswal Maintains 'Neutral' Rating On The Stock — Check Target Price.DISCLAIMERThis report is authored by an external party. NDTV Profit 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 NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Axis Bank Q2 Review — Healthy Quarter Despite One-Time Provisioning Impact; Dolat Capital Maintains 'Add'

The brokerage maintains ‘Accumulate’ rating, valuing Axis Bank at 1.7x FY27E P/adjusted book value.

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