Q4FY21 Result Update - Axis Bank - ICICI Direct

Axis Bank reported a strong set of numbers with a sequential pick-up in business growth, improved asset quality and better than estimated bottomline performance. NII was up 11% YoY to Rs. 7555 crore aided by 7% QoQ rise in loans and stable margins, NIMs at 3.56% vs. 3.55% YoY, 3.59% QoQ. Despite ~20 bps fall in cost of funds sequentially, margins were stable as a result of higher LCR, loan mix shift toward better rated portfolios and also previous quarter had positive 8 bps impact of interest of IT refund. Other income jumped 17% YoY, 23% QoQ with fee income growing 15% YoY, 16% QoQ to Rs. 3376 crore while trading gains were boosted by the sale of strategic investment of ~Rs. 300 crore. Provisions during the quarter declined sequentially by 28% to Rs. 3295 crore (below our estimate). This included Rs. 803 crore due to change in provisioning policy for commercial banking segment. As a result, PAT came in at Rs. 2677 crore, higher than estimate.

Valuation & Outlook

We believe the bank's focus on calibrated approach on growth, b/s strengthening, strong liability profile along with healthy capitalisation makes it well placed to accrue earnings growth ahead. Selective lending, strong liability profile along with healthy capitalisation make it well placed to accrue healthy earnings growth and improvement in RoE. Resurgence of cases and subsequent lockdown may act as deterrent in collections but situation remains manageable. Healthy provision coverage provides comfort on smoother earnings trajectory ahead. We expect earnings to grow at ~34% CAGR in FY21-23E and improvement in RoE at ~14% in FY23E. Hence, we remain positive on the stock and arrive at a target price of Rs. 900 (Rs. 800 earlier), valuing the stock at ~2.1x FY23E core ABV. We maintain BUY rating.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_AxisBank_Q4FY21.pdf

Shares of AXIS BANK LTD. was last trading in BSE at Rs.707.85 as compared to the previous close of Rs. 699.3. The total number of shares traded during the day was 2104320 in over 29486 trades.

The stock hit an intraday high of Rs. 713 and intraday low of 688.25. The net turnover during the day was Rs. 1475164128.

Source : Equity Bulls

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