Hold Axis Bank - Headwinds to earnings growth persist - Emkay

Reco: HOLD
CMP: Rs1119
Target Price: Rs1050

- Axis Bank Q2FY13 NII / net profit at Rs23.3bn/11.2bn inline with consensus driven by one-off capital gains. Loan growth modest at 0.6% qoq, 9bps qoq expansion in NIMs driven NII

- Provisions shoot up dramatically to Rs5.1bn even as the provisions cover dipped by 1% to 70%. Restructuring at Rs3.2bn. Slippages may have remained high

- Unfavorable base in H2FY13 could slow earnings growth significantly: (1) higher trading gains at Rs2.6bn (2) low provisions at Rs5.6bn, (3) low YTD loan growth at 1.4%

- With lack of earnings growth catalyst and risks to asset quality, valuations at 1.8/1.5x FY13/FY14 ABV are reasonable. We will relook at earnings post management comments.

Source : Equity Bulls

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