Axis Bank - Nirmal Bang Institutional

- Axis Bank posted net earnings of Rs14.1bn for 1QFY14 aided by loan book growth of 15.8% YoY (retail advances grew 39.7% YoY) and expansion in margins of 16bps QoQ, leading to net interest income growth of 31.4%.

- While NNPAs (net non-performing assets) were on the higher side, the restructured loan book came in lower due to upgradations amounting to Rs4.8bn.

- Following higher slippage at Rs6.8bn and higher-than-expected stress on asset quality, we have revised upwards our GNPA (gross non-performing asset), NNPA and restructured loan estimates for FY14/FY15 by 19.5%/38.7%, 40.8%/58.5% and 13.4%/27.1%, respectively.

- Consequently, we have reduced our target multiple to 2.2x from 2.5x earlier. We have retained our Buy rating on the stock with a reduced target price of Rs1,570 from Rs1,800 earlier.

Source : Equity Bulls

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