Views on Axis Bank 2QFY2016 Results: Angel Broking

Views of Mr. Vaibhav Agrawal (VP Research- Banking, Angel Broking) on Axis Bank 2QFY2016 Results:

"Axis Bank reported a positive set of numbers for 2QFY2016 with steady asset quality and 18.9% YoY growth in profit to INR 1,915.6cr which was well in-line with the expectations. On the balance sheet front, Advances for the quarter grew by 23% YoY, which is strong, considering the slower credit growth in the economy. Retail Advances grew 27% YoY and accounted for 40% of the Net Advances of the Bank. On the operating front, the Net Interest Income for the bank grew at a moderate pace by 15.2% YoY which was slightly below expectations likely due to higher than expected impact of base rate cut. Provisions for the bank declined 37% qoq whereas on a YoY basis, it declined by 2.5% which was much below our expectations.

On the asset quality front, the bank reported a steady set of numbers, as its reported Gross as well as Net NPA ratio was constant at 1.38% and 0.48% which is similar to the previous quarter. Slippages too came in at INR 583cr which were much below than the previous quarter at INR 1,186 cr suggesting better asset quality. However, we would wait for more clarity regarding any sale to ARC's for the quarter.

Hence, given the bank's healthy advances growth, better than expected asset quality combined with consistent growth in earnings, we are of the view that the stock is attractively valued at 2.1x FY2017E P/ABV. We recommend a BUY rating on the stock."

Shares of AXIS BANK LTD. was last trading in BSE at Rs.482.95 as compared to the previous close of Rs. 521.3. The total number of shares traded during the day was 2578975 in over 41134 trades.

The stock hit an intraday high of Rs. 495.7 and intraday low of 477. The net turnover during the day was Rs. 1254549711.

Source : Equity Bulls

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