Key Highlights of Q1FY13
- During Q1FY13, NII grew by a decent 26% y-o-y to Rs.21,799 mn, on the back of strong Advances growth. Its Advances grew 30% y-o-y (Ex-currency depreciation 25%), mainly from robust growth of 50% y-o-y in retail segment (as per outlined strategy). Its Deposits grew by 21% y-o-y, while CASA grew by 17% y-o-y. However, its CASA share in total deposit contracted by 148 bps y-o-y & 248 bps q-o-q standing at 39.1%, mainly due to contraction in current deposit and high growth in term deposits.The share of bulk deposits stood at 37% of total deposits against 39% in Q1FY12.
- The Bank reported a sluggish non interest income growth of 9% y-o-y, supported by fee from retail and agri & SME banking. Treasury income saw a growth of 114% y-o-y, which includes stake sale from Max India (Rs.890 mn). The Bank expects non interest income growth to track B/S growth.
- Axis Bank’s operating expenses increased by 16% y-o-y with employee expenses increasing by 14% y-o-y and other operating expenses increased by 18% y-o-y on higher network expansion. Its Cost to Income ratio improved to 44.1% in Q1FY13 as against 46.1% in Q1FY12.
- Axis Bank’s total provisions in Q1FY13 increased by 47% y-o-y to Rs.2,588 mn on account of higher provisioning required on loan losses & standard assets (Rs.2.75 bn against Rs.1.37 bn in Q1FY12) from higher slippages. Write back on investment depreciation aided provisions. As a result, the Bank’s Net Profit saw a growth of 22% y-o-y and stood at Rs.11,535 mn.
Outlook and Valuation: Axis Bank has grown at a very healthy pace in past few years with strong build-up in liability franchise, diversified loan book, stable asset quality and high return ratios. Sushil Finance have largely retained their estimates and going forward, they expect its Advance & Deposit to grow by 19.1% & 17.7% respectively in FY13E and 19.5% & 18.4% respectively in FY14E, while Net Profit to grow at 7% in FY13E & at 16% in FY14E. The steady performance, higher than system growth outlook, focus on retail assets and better deposit franchise will emerge as key value drivers for the stock in medium term. Axis Bank currently trades at an attractive valuation of 1.4x FY14E ABV & 8.2x FY14E Earnings. Rating is changed to “Hold” with a price target of Rs.1205.
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Sushil Finance was established in 1982 as a Proprietary Concern with focus on underwriting and marketing IPOs. The Company Acquired membership of the Stock Exchange, Mumbai in 1982. In the year 1986, the company started its Secondary Market Division, and got itself empanelled on various Financial Institutions viz. UTI, Canbank Mutual Fund and the like. As on date the company is empanelled with more than 40 Financial Institutions / Banks. In the year 1998, the BSE membership was corporatised. It has evolved into a major brokerage house under the leadership of Mr. Sushil Shah, the founder and driving force of the organization.
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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.
- Axis Bank Q3 Results: Robust performance; buy for a target of Rs601
- Third Quarter Results: Axis Bank shows healthy earnings
- Third Quarter Results: Axis Bank reports steady quarter; buy
- Q3FY15 Preview: Axis Bank, Bank of Baroda to report healthy PAT
- Axis Bank Q3FY15 Preview: Loan growth to remain healthy
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