Experts recommend buy for Axis Bank stocks

Hyderabad A buy rating has been given to the Axis Bank Limited with a recommendation to buy the stock at a target price of Rs 860 per share whose current market price is Rs 741. Given the healthy asset mix, liability strength, adequate capital and superior customer profile, the bank is poised to face near term challenges and benefit in the phase of normalisation. Outlook is positive on the company over medium to longer term perspective, according to the experts at the at Anand Rathi Research group.

The bank reported a net interest income growth of 11 per cent in its Q1-FY22 standalone results at Rs 77,600 million as against Rs 69,850 million in Q1-FY21, driven by advances growth of 12 per cent and a net interest margin of 3.46 per cent. Non-interest income (comprising of fee, trading profit and miscellaneous income) for Q1-FY22 stood at Rs 35,880 million, growth of 39 per cent YoY.

Operating profit for Q1-FY22 stood at Rs 64,160 million, up by 10 per cent YOY. During the quarter, the bank has made provisions of Rs 31,510 million. Core operating profit for Q1-FY21 stood at Rs 58,960 million, up by 13 per cent YOY. The bank reported standalone profit of Rs 21,600 million, as compared to profit of Rs 11,120 million in Q1-FY21.

The bank's advances grew 12 per cent YOY to Rs 6,148,740 million as on 30th June 2021. Retail loans grew 14 per cent YOY to Rs 3,312,420 million and accounted for 54 per cent of the net advances of the Bank. The growth in the Retail advances was driven by all product segments across home loans, loan against property, Auto. Corporate loan book grew by 8 per cent YoY. As much as 85 per cent of corporate book is now rated A- and above with 94 per cent of incremental sanctions in Q1FY22 being to corporates rated A- and above.

The total deposits on quarterly average basis (QAB) grew by 11 per cent YoY and 16 per cent on period-end basis. Savings account deposits grew 19 per cent YOY and 7 per cent QoQ, Current Account deposits grew 17 per cent YOY and Retail Term Deposits grew 11 per cent YOY. CASA and Retail Term Deposits on a QAB basis put together recorded a growth of 2 per cent YOY. The share of CASA and Retail Term Deposits in the Total Deposits was 83 per cent as of 30th June 2021.

The bank's gross NPA and net NPA levels were 3.85 per cent and 1.20 per cent respectively, as on 30th June 2021, as against 3.70 per cent and 1.05 per cent respectively as on 31st March 2021. The reported gross slippages for quarter were Rs 65,180 million, compared to Rs 52,850 million during Q4-FY2 and Rs.22,180 million in Q1-FY21.