Views on Axis Bank results - Angel Broking

Views of Mr. Vaibhav Agrawal (VP- Research – Banking, Angel Broking) on Axis Bank results:

"Axis Bank delivered healthy operating performance for the quarter, which was in-line with our estimates. NII expectedly grew at a healthy pace of 18.8% yoy, aided by loan book growth of 16.8% yoy. Non-interest income performance was moderate with a 10.3% growth yoy. Opex grew 13.9% yoy on expected lines, which enabled bank to register pre-provisioning profits growth of 16.0% yoy. On the asset quality front, absolute Gross and Net NPAs increased by 4.6% and 2.1% qoq respectively, which given the context of current challenging macro environment, appears to be a moderate increase. Provisioning expenses for the bank came in lower by 15.1% yoy at Rs 505cr. Tax expense unexpectedly increased by 38.7% yoy to Rs 900cr which restricted earnings growth to 18.5% yoy at Rs 1,842cr. At CMP, the stock trades at relatively cheap valuations of 1.4x FY2016 ABV, which is well below our longer term fair value estimate for the bank. Though near term outlook for the bank remains challenging, given the current macro environment, from a structural point-of-view compared to peers, keeping in mind its robust franchise and capital adequacy (Total CAR at 16.1% ), it remains one of the preferred banks. In our view, from a medium term perspective we recommend investors to Buy the stock with a target price of Rs 1,922."

Source : Equity Bulls

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