Morgan Stanley Underweight on Axis Bank

Morgan Stanley has come out with a research report on Axis Bank Limited recently, where the company has downgraded the rating from Equal-weight to Underweight and reducing the price target from Rs.900 to Rs.800.

Morgan Stanley had said that the reason for reducing the rating is due to the risk that asset quality could deteriorate further on prolonged slowdown, high exposure to infrastructure segment, low common equity tier I ratio and slowing asset growth along with lower fee income growth and provisions.

Axis is off from recent highs (still up 21% YTD) and trades at optically attractive levels. However, we expect EPS growth to slow in F14 (two-year CAGR of 5-6%) as growth unwinds and the shadow of rising impairments remains, constraining the stock. Capital is also weaker than peers.

Source : Equity Bulls

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