Q1FY21 Result Update - Axis Bank (Buy): Waning moratorium book; stable business growth - ICICI Securities

Axis Bank reported healthy Q1FY21 numbers with a strong operational performance. QoQ fall in provisioning led PAT to come in at Rs. 1121 crore. Main highlight was sharp reduction in moratorium book from 28% to 9.7%. Provisioning for the quarter was at Rs. 4416 crore (~79 bps of advances) vs. Rs. 7730 crore in Q4FY20. The bank has made additional provisioning of Rs. 915 crore during the quarter of which Rs. 733 crore is for Covid-19. Accordingly, outstanding contingent provisions were at Rs. 6898 crore (~1.2% of advances). Sequential decline in provisioning led the bank to report a profit of Rs. 1121 crore vs. a loss of Rs. 1388 crore in Q4FY20.

Valuation & Outlook

Covid-19 provisions, subdued business growth are delaying a revival in RoE. However, given healthy asset mix, liability strength, adequate capital, superior customer profile, we believe the bank is well poised to face near term challenges. A 1.2% provisioning coupled with lower moratorium book provides cushion for delinquency shocks post Morat period. We value the bank at 1.7x FY22E ABV to arrive at a revised TP of Rs. 530 and maintain BUY.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_AxisBank_Q1FY21.pdf

Shares of AXIS BANK LTD. was last trading in BSE at Rs.479.05 as compared to the previous close of Rs. 446.2. The total number of shares traded during the day was 2967187 in over 41578 trades.

The stock hit an intraday high of Rs. 484.45 and intraday low of 460.25. The net turnover during the day was Rs. 1399695389.

Source : Equity Bulls

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