Axis Bank - Limited upside left from current levels - Kotak

Axis bank is likely to witness some pressure on its NIM as the benefits of recapitalization tapers. We model NIM to come around 3.6%/3.5% during FY14E/15E as compared to 3.82% in H1FY14. Although headline NPLs suggest comfort, high exposure to non-operational power portfolio remains a potential risk, in our view. Management raised the guidance on incremental stress build-up by ~20% post higher than expected restructuring during Q2FY14. Its retail book has seen impressive performance in recent times - share has gone up by ~450bps to 30.2% during last one year. It has outperformed Sensex by ~16% during last one & half months and is ahead of fundamentals, in our view. Hence, we downgrade the stock to ACCUMULATE from BUY earlier with an unchanged TP of Rs.1370 based on P/ABV of 1.55x its FY15E ABV.

Source : Equity Bulls

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