Axis Bank 4Q FY 2013
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Transcript of Axis Bank 4Q FY 2013
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7/30/2019 Axis Bank 4Q FY 2013
1/13
Please refer to important disclosures at the end of this report 1
Particulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy)NII 2,665 2,495 6.8 2,146 24.2Pre-prov. profit 2,800 2,362 18.6 2,038 37.4
PAT 1,555 1,347 15.4 1,277 21.8Source: Company, Angel Research
During 4QFY2013, Axis Bank reported a 21.8% yoy growth in its net profit, which
was in-line with our estimates. Key highlights from the result were improvement in
NIMs (13bp qoq to 3.7%), robust growth in fee income (22.0% yoy) and stable NPA
ratios (Gross NPA at 1.06%, and Net NPA ratio at 0.32%).
NIMs improve sequentially; Asset quality remains stable: During 4QFY2013,the bank reported a healthy growth in its business, with advances and deposits
registering a growth of 16.0% and 14.8% yoy, respectively. Growth in the loan
book was primarily on account of strong traction witnessed in the retail loan book,
which grew by 43.6% yoy, while SME loans grew at a robust 25.7% yoy. CASA
deposits grew at a healthy pace of 22.6% yoy, aided by a robust growth of 23.4%
and 21.6% yoy in savings deposits and current deposits, respectively. The bank
registered a robust growth in its non-interest income excluding trading profits,
largely driven by a healthy growth in fee income from the Retail & DCM segments.
The bank registered trading gains of `238cr during the quarter and used the
opportunity to create a contingency provision of `240cr. On the asset quality front,
slippages came in lower sequentially at `398cr, compared to `541cr witnessed in
3QFY2013, however, slippages and fresh restructuring, taken together amounted
to ~`1,200cr during the quarter, higher than the Managements guidance of
around `1,000cr. Going forward, the Management expects slippages and
restructuring per quarter to remain at similar levels for the next few quarters. Along
with sequentially lower slippages, the bank also reported sequentially higher
recoveries and upgrades at `205cr, which helped it to contain the sequential
increase in its gross and net NPA levels, on an absolute basis, to 5.2% and 3.7%,
respectively. The banks PCR dipped by 200bp qoq to 79%. Of the total
restructuring during the quarter (`791cr), nearly `500cr came from Engineering
and Iron & Steel. Its total restructured book, as of 4QFY2013 stands at `4,368cr.
Outlook and valuation:Axis Bank is trading at 1.6x FY2015E ABV more than50% discount to HDFC Bank vs. an average discount of around 38% over the past
five years (which we believe over-discounts asset quality concerns). We remain
positive on the bank, owing to its attractive CASA franchise, multiple sources of
sustainable fee income and reasonable growth outlook. We maintain our Buyrecommendation, with a target price of `1,737.Key financials (Standalone)Y/E March (` cr) FY2012 FY2013 FY2014E FY2015ENII 8,018 9,666 11,745 13,713% chg 22.2 20.6 21.5 16.8
Net profit 4,242 5,179 6,742 7,556% chg 25.2 22.1 30.2 12.1
NIM (%) 3.1 3.2 3.3 3.3
EPS (`) 102.7 110.7 144.1 161.5P/E (x) 14.1 13.0 10.0 8.9
P/ABV (x) 2.6 2.0 1.8 1.6
RoA (%) 1.6 1.7 1.8 1.7
RoE (%) 20.3 18.5 18.9 18.3
Source: Company, Angel Research
BUYCMP `1,503
Target Price `1,737
Investment Period 12 Months
Stock Info
Sector
Bloomberg Code
Shareholding Pattern (%)
Promoters 33.9
MF / Banks / Indian Fls 8.5
FII / NRIs / OCBs 49.3Indian Public / Others 8.3
Abs. (%) 3m 1yr 3yr
Sensex (3.5) 13.2 9.7
AXSB 8.6 37.3 21.9
Banking
Market Cap (` cr) 70,355
Beta 1.2
52 Week High / Low 1519/922
Avg. Daily Volume 182,570
Face Value (`) 10BSE Sensex 19,407
Nifty 5,916
Reuters Code AXSB.BO
AXSB@IN
Vaibhav Agrawal022 3935 7800 Ext: 6808
Sourabh Taparia022 3935 7800 Ext: 6872
Akshay Narang022 3935 7800 Ext: 6829
Harshal Patkar022 3935 7800 Ext: [email protected]
Axis BankPerformance Highlights
4QFY2013 Result Update | Banking
April 25, 2013
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Axis Bank | 4QFY2013 Result Update
April 25, 2013 2
Exhibit 1:4QFY2013 performance summary (Standalone)Particulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy) FY2013 FY2012 % chgInterest earned 7,048 6,965 1.2 6,060 16.3 27,183 21,995 23.6- on Advances / Bills 4,899 4,907 (0.2) 4,258 15.1 19,166 15,379 24.6- on investments 2,030 2,014 0.8 1,738 16.8 7,747 6,394 21.2
- on balance with RBI & others 42 25 68.8 24 74.4 111 98 13.0
- on others 77 19 301.5 41 88.7 158 123 29.0
Interest Expended 4,383 4,470 (2.0) 3,914 12.0 17,516 13,977 25.3Net Interest Income 2,665 2,495 6.8 2,146 24.2 9,666 8,018 20.6Other income 2,007 1,615 24.3 1,588 26.4 6,551 5,420 20.9Other income excl. treasury 1,769 1,456 21.5 1,442 22.7 5,796 5,059 14.6
- Fee Income 1,618 1,405 15.1 1,327 22.0 5,521 4,727 16.8
- Trading gains 238 159 49.6 146 63.1 755 362 108.8
- Others 151 51 196.8 115 31.5 275 332 (17.0)
Operating income 4,672 4,110 13.7 3,734 25.1 16,217 13,438 20.7Operating expenses 1,872 1,749 7.1 1,696 10.4 6,914 6,007 15.1- Employee expenses 601 615 (2.2) 530 13.6 2,377 2,080 14.3
- Other Opex 1,271 1,134 12.1 1,167 8.9 4,537 3,927 15.5
Pre-provision Profit 2,800 2,362 18.6 2,038 37.4 9,303 7,431 25.2Provisions & Contingencies 595 387 53.9 139 327.4 1,750 1,143 53.1- Provisions for NPAs 145 325 (55.4) 127 14.2 1,138 861 32.2
- Other Provisions 450 62 628.4 12 3,567.3 612 282 17.2
PBT 2,204 1,975 11.6 1,898 16.1 7,553 6,288 20.1Provision for Tax 649 627 3.5 621 4.5 2,373 2,046 16.0
PAT 1,555 1,347 15.4 1,277 21.8 5,179 4,242 22.1Source: Company, Angel Research
Exhibit 2:4QFY2013 Actual vs. Angel estimatesParticulars (` cr) Actual Estimates Var. (%)Net interest income 2,665 2,682 (0.7)
Other income 2,007 1,812 10.8
Operating income 4,672 4,494 3.9Operating expenses 1,872 1,867 0.3
Pre-prov. profit 2,800 2,627 6.6Provisions & cont. 595 359 65.8
PBT 2,204 2,268 (2.8)
Prov. for taxes 649 747 (13.1)
PAT 1,555 1,521 2.2Source: Company, Angel Research
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Axis Bank | 4QFY2013 Result Update
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Exhibit 3:4QFY2013 performance analysis (Standalone)Particulars 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy)Balance sheetAdvances (`cr) 196,966 179,504 9.7 169,760 16.0
Deposits (`cr) 252,614 244,501 3.3 220,104 14.8
Credit-to-Deposit Ratio (%) 78.0 73.4 455bp 77.1 84bp
Current deposits (` cr) 48,332 40,236 20.1 39,754 21.6
Saving deposits (`cr) 63,778 57,521 10.9 51,668 23.4
CASA deposits (`cr) 112,110 97,757 14.7 91,422 22.6
CASA ratio (%) 44.4 40.0 440bp 41.5 284bp
CAR (%) 17.0 13.7 327bp 13.7 334bp
Tier 1 CAR (%) 12.2 8.8 340bp 9.5 278bp
Profitability Ratios (%)Cost of funds 6.5 6.5 (7)bp 6.5 0bpReported NIM 3.7 3.6 13bp 3.6 15bp
Cost-to-income ratio 40.1 42.5 (247)bp 45.4 (536)bp
Asset qualityGross NPAs (`cr) 2,393 2,275 5.2 1,806 32.5
Gross NPAs (%) 1.1 1.1 (4)bp 0.9 12bp
Net NPAs (`cr) 704 679 3.7 473 49.0
Net NPAs (%) 0.3 0.3 (1)bp 0.3 7bp
Provision Coverage Ratio (%) 79.0 81.0 (200)bp 81.0 (200)bp
Slippage ratio (%) 0.9 1.3 (34)bp 1.4 (51)bp
Loan loss provision
to avg. assets (%)0.2 0.4 (24)bp 0.2 (1)bp
Source: Company, Angel Research
Healthy growth in Balance sheet continues
During 4QFY2013, the bank reported a healthy growth in business, with advances
and deposits registering a growth of 16.0% and 14.8% yoy, respectively. The
growth in the loan book was primarily on account of strong traction witnessed in
the retail loan book which grew by 43.6% yoy, within which, auto loans grew by
54.7% yoy and now constitute around 4% of the total loan book. The SME loan
book also grew at a robust pace of 25.7% yoy during the quarter.
Growth in the large and mid-corporate segment remained moderate at 7.9% yoy.
The Management has reiterated its guidance of above industry-average loan
growth during FY2014, with primary focus on retail (home, auto) followed by SME.
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Axis Bank | 4QFY2013 Result Update
April 25, 2013 4
Exhibit 4:Strong yoy growth in retail loans aided healthy adv. growthParticulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy) % to totalCorporate 98,239 94,580 3.9 91,054 7.9 49.9
SME 29,922 25,295 18.3 23,796 25.7 15.2
Agri 14,845 11,561 28.4 17,340 (14.4) 7.5
Retail 53,960 48,068 12.3 37,570 43.6 27.4
- Housing 35,074 32,686 7.3 28,178 24.5 17.8
- Auto 7,554 5,768 31.0 4,884 54.7 3.8
- Others 11,332 9,614 17.9 4,508 151.3 5.8
Total advances 196,966 179,504 9.7 169,760 16.0 100.0Source: Company, Angel Research
CASA deposits registered a healthy growth of 22.6% yoy, aided by a strong growth
of 23.4% in savings deposits and a healthy 21.5% growth in current deposits. On
a daily average basis, the overall CASA deposits grew by 14% yoy, within which
saving deposits grew by 20%.
Period-end CASA ratio improved by 400bp sequentaily to 44%. On a daily
average basis, the CASA ratio remianed stable sequentailly at 36%. The bank
registered a 24% yoy growth in its retail term deposits franchise, which reflects its
focus of building a stronger retail term deposits portfolio. As of 4QFY2013, retail
term deposits constitute 42% of total term deposits as against 39% as of
4QFY2012.
Exhibit 5:Average CASA deposits grew by 14% yoy
Source: Company, Angel Research
Exhibit 6:Period-end CASA ratio increased to 44.4%
Source: Company, Angel Research
NIMs improve sequentially
During the quarter, the banks overall reported NIM improved by 13bp qoq to
3.7%, mainly due to a decline witnessed in cost of funds. The cost of funds
declined marginally by 7bp to 6.45% on account of freshly capital raising done in
February 2013.
24
16 16 15 14
-
5
10
15
20
25
30
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
Reported yoy growth in average CASA balances (%)
41.5
39.140.5 40.0
44.4
30.0
32.0
34.0
36.0
38.0
40.0
42.0
44.0
46.0
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
(%)
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Axis Bank | 4QFY2013 Result Update
April 25, 2013 5
Exhibit 7:Cost of funds lower sequentially by 7bp...
Source: Company, Angel Research
Exhibit 8:....hence, NIM higher by 13bp qoq
Source: Company, Angel Research
Healthy growth in non-interest income excluding trading profits,largely aided by robust growth in fee income from Retail and
DCM segments
During 4QFY2013, growth in fee income for the bank remained healthy at 22.0%
yoy, which was largely aided by robust growth in fee income from segments such
as Retail. Fee income from the Retail segment grew by 37.3% yoy which can be
attributed to healthy loan book growth in this segment. Growth in fee income from
the DCM (Debt Capital Markets) segment came in strongly at 43.0% yoy.
Trading profits came in much higher at `238cr during the quarter as against
`159cr in 3QFY2013 and `146cr in 4QFY2012. Overall, the non-interest income
excluding trading profits registered a healthy growth of 22.7% yoy during
4QFY2013.
Exhibit 9:Fee income grew at healthy pace on a yoy basisParticulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy)Fee Income 1,618 1,405 15.1 1,327 22.0Corporate 469 464 1.2 442 6.2
DCM 356 281 26.7 249 43.0
Agri & SME 129 84 53.5 117 10.6
Business banking 129 112 15.2 128 1.1
Capital markets 16 14 15.2 13 24.5
Retail 518 450 15.2 377 37.3Trading profit 238 159 49.6 146 63.1Others 151 51 196.8 115 31.5Other income 2,007 1,615 24.3 1,588 26.4Other income excl. Trading Profits 1,769 1,456 21.5 1,442 22.7
Source: Company, Angel Research
6.456.70
6.54 6.52 6.45
3.5
4.5
5.5
6.5
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
(%)
3.553.37
3.463.57
3.70
2.4
2.7
3.0
3.3
3.6
3.9
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
(%)
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Axis Bank | 4QFY2013 Result Update
April 25, 2013 6
Sequentially, lower slippages and higher recoveries/upgrades
result in stable NPA ratios
On the asset quality front, the slippages for the bank during the quarter came in at
`398cr, as against `514cr witnessed in 3QFY2013. However, slippages and fresh
restructuring taken together amounted to ~`1,200cr during the quarter, higher
than the Managements guidance of around `1,000cr. Going forward, the
Management expects slippages and restructuring per quarter to remain at similar
levels for the next few quarters.
Along with sequentially lower slippages, the bank also reported sequentially higher
recoveries and upgrades at `205cr, which helped it to contain the sequential
increase in its gross and net NPA levels, on an absolute basis, to 5.2% and 3.7%,
respectively. The gross and net NPA ratio remained stable sequentially at 1.06%
and 0.32%, respectively.
The banks PCR dipped by 200bp qoq to 79%. Of the total restructuring during the
quarter (`791cr), nearly`500cr came from Engineering and Iron & Steel. Its total
restructured book, as of 4QFY2013 stands at `4,368cr.
Exhibit 10:Slippages Ratio lower sequentially...
Source: Company, Angel Research
Exhibit 11:...leading to sequentially stable NPA ratios
Source: Company, Angel Research; Note: PCR including tech. write-offs
Exhibit 12:Steady Network expansion continues
Source: Company, Angel Research;
Exhibit 13:Cost-to-income ratio moderates to 40.1%
Source: Company, Angel Research
1.44
1.07
1.48
1.27
0.94
-
0.40
0.80
1.20
1.60
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
(%)
0.9
1.1
1.1
1.1
1.1
0.3
0.3
0.3
0.3
0.3
81.079.0 80.0
81.079.0
55.0
62.5
70.0
77.5
85.0
-
0.3
0.5
0.8
1.0
1.3
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
Gross NPAs (%) Net NPAs (%) NPA coverage (%, RHS)
1,6
22
1,6
65
1,7
41
1,7
87
1,9
47
9,924 10,33710,297 10,363
11,245
-
2,500
5,000
7,500
10,000
12,500
400
800
1,200
1,600
2,000
2,400
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
Branches ATMs (RHS)
2.4 2.2 2.4 2.3 2.3
45.4
44.1 44.4
42.5
40.1
38.0
41.0
44.0
47.0
2.0
2.1
2.2
2.3
2.4
2.5
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
Opex to avg. assets (%) CIR (%, RHS)
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Axis Bank | 4QFY2013 Result Update
April 25, 2013 7
Investment arguments
Strong Retail & DCM businesses continue to support earnings
growth
Over the past ten years, Axis Bank has aggressively expanded its branch network
at around 30% CAGR (~2,000 branches now), which has not only aided the bank
in steadily growing its retail liabilities profile, but has also laid a strong platform for
building up a sustainable retail assets portfolio. As of 4QFY2013, its CASA ratio
stands at around 44%, amongst the best in the industry; the share of retail deposits
(CASA + retail term) to total deposits stands at around 68% for the bank. On the
assets side, the retail advances to total loans for the bank stands at a healthy
27.3%, up from ~20% as of FY2011.
Axis Bank has been able to sustain its healthy growth on the non-interest income
front and maintain the fee income contribution at a meaningful 1.9% of totalassets, primarily on account of 1) the strong traction in retail business which helps
it to generate a healthy fee income from the retail segment; and 2) robust growth
in fee income from the DCM (Debt Capital Markets) business. Hence, strong
traction in Retail & DCM business continues to support healthy earnings
momentum for the bank, despite current macro challenges.
even as corporate business remains subdued
Considering the current macro headwinds, Axis bank has adopted a consolidation
approach in its corporate loan portfolio. During 4QFY2013, its Mid and Large
corporate book grew at a moderate pace of 7.9% yoy, which also resulted in a
muted 6.2% yoy growth in its fee income from the corporate segment. Few sectors
like Engineering, Iron & Steel, Infrastructure (incl. Power) and Textile have
contributed a large part of the incremental asset quality concerns for the banking
industry. Despite having around 30% of its loan book exposed to these sectors,
Axis bank has been able to contain its quantum of stressed assets (NPA and
restructured assets). However, as indicated by the Management, nearly 70% of
its power exposure (ie ~6% of its total loan book) is towards projects which are
yet-to-be-commissioned over the next two years. This poses a concern on the
quality of these assets, unless there is a positive policy action on part of the
government.
Healthy capital adequacy
Axis Bank's tier-I capital adequacy improved to 12.2% as of 4QFY2013, as it
raised `5,537cr in February, 2013. The capital infusion gives it enough headroom
for credit growth for the next three years, even if we expect the Management to
meet its guidance of above-industry average loan growth and improve its credit
market share.
Outlook and valuation
Axis Banks aggressive branch expansion (at a CAGR of ~25%) over the past five
years, has not only aided it to steadily grow its retail liabilities profile, but has also
helped it build a sustainable retail assets portfolio. Healthy fee income from the
retail segment considering its strong retail business growth, coupled with robust fee
income from the DCM (Debt Capital Markets) business, aid it to maintain fee
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Axis Bank | 4QFY2013 Result Update
April 25, 2013 8
income contribution at a meaningful 1.9% of total assets and support healthy
earnings momentum for the bank. Consequently, notwithstanding moderate
concerns on the corporate book asset quality, we expect the retail business to drive
earnings at a healthy CAGR of 17.3% over FY2013-15E.
Axis Bank is trading at 1.6x FY2015E ABV, ie at a more than 50% discount vs an
average discount of around 38% over the past five years to HDFC Bank (which we
believe over-discounts asset quality concerns). We remain positive on Axis Bank,
owing to its attractive CASA franchise, multiple sources of sustainable fee income
and reasonable growth outlook. We maintain our Buy recommendation, with atarget price of `1,737.Exhibit 14:Key assumptionsParticulars (%) Earlier estimates Revised estimatesFY2014 FY2015 FY2014 FY2015Credit growth 21.0 23.0 21.0 23.0
Deposit growth 19.0 23.0 19.0 23.0
CASA ratio 41.3 41.2 44.2 44.2
NIMs 3.3 3.3 3.3 3.2
Other income growth 12.1 21.6 9.9 21.6
Growth in staff expenses 18.1 22.5 18.1 22.5
Growth in other expenses 18.1 22.5 18.1 22.5
Slippages 1.4 1.4 1.3 1.3
Coverage ratio 80.0 80.0 80.0 80.0
Source: Angel Research
Exhibit 15:Change in estimatesParticulars (` cr)
FY2014 FY2015Earlierestimates Revisedestimates Var. (%) Earlierestimates Revisedestimates Var. (%)
NII 11,776 11,857 0.7 13,960 13,953 (0.0)
Non-interest income 7,126 7,198 1.0 8,665 8,756 1.1
Operating income 18,901 19,055 0.8 22,625 22,710 0.4Operating expenses 8,156 8,162 0.1 9,992 9,999 0.1
Pre-prov. profit 10,745 10,893 1.4 12,634 12,711 0.6Provisions & cont. 1,650 1,631
(1.2)1,983 1,914
(3.5)
PBT 9,095 9,262 1.8 10,650 10,797 1.4
Prov. for taxes 3,091 3,148 1.8 3,620 3,670 1.4
PAT 6,003 6,114 1.8 7,030 7,127 1.4Source: Angel Research
Exhibit 16:Angel EPS forecast vs. consensusYear Angel forecast Bloomberg consensus Var. (%)FY2014E 130.7 133.1 (1.8)
FY2015E 152.3 157.4 (3.2)
Source: Bloomberg, Angel Research
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Axis Bank | 4QFY2013 Result Update
April 25, 2013 9
Exhibit 17:P/ABV band
Source: Company, Angel Research
Exhibit 18:Discount to HDFC Bank (%)
Source: Company, Angel Research
0
400
800
1,200
1,600
2,000
2,400
2,800
3,200
Apr-06
Sep-0
6
Feb-0
7
Jul-07
Dec-0
7
May-0
8
Oct-08
Mar-09
Aug-0
9
Jan-1
0
Jun-1
0
Nov-1
0
Apr-11
Sep-1
1
Feb-1
2
Jul-12
Dec-1
2
May-1
3
Oct-13
Mar-14
Price (`) 0.8x 1.4x 2x 2.6x 3.2x
(75.0)
(60.0)
(45.0)
(30.0)
(15.0)
-
Dec-0
7
Mar-08
Jun-0
8
Sep-0
8
Dec-0
8
Mar-09
Jun-0
9
Sep-0
9
Dec-0
9
Mar-10
Jun-1
0
Sep-1
0
Dec-1
0
Mar-11
Jun-1
1
Sep-1
1
Dec-1
1
Mar-12
Jun-1
2
Sep-1
2
Dec-1
2
Mar-13
(%)
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Axis Bank | 4QFY2013 Result Update
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Exhibit 19:Recommendation summaryCompany Reco. CMP(`) Tgt. price(`) Upside(%) FY2015EP/ABV (x) FY2015E Tgt.P/ABV (x) FY2015EP/E (x) FY13-15E EPSCAGR (%) FY2015ERoA (%) FY2015ERoE (%)AXSB Buy 1,503 1,737 15.6 1.6 1.9 9.9 17.3 1.6 17.6FEDBK Neutral 454 - - 1.0 - 7.7 10.0 1.2 13.7
HDFCBK Neutral 689 - - 3.2 - 16.2 22.8 1.8 21.8
ICICIBK Accumulate 1,177 1,306 10.9 1.7 1.9 12.2 15.5 1.4 16.5
SIB Neutral 24 - - 0.9 - 5.3 11.4 1.0 17.1
YESBK Neutral 504 - - 2.1 - 10.5 14.9 1.3 22.1
ALLBK Accumulate 136 155 13.8 0.5 0.6 3.8 12.6 0.8 14.2
ANDHBK Neutral 93 - - 0.6 - 4.0 4.2 0.8 13.4
BOB Buy 706 815 15.5 0.7 0.9 4.9 17.0 1.0 16.0
BOI Accumulate 338 360 6.6 0.8 0.8 4.9 21.8 0.8 15.1
BOM Accumulate 50 56 11.2 0.6 0.6 3.8 14.8 0.6 15.6
CANBK Accumulate 439 461 5.1 0.7 0.8 5.1 14.0 0.8 14.1CENTBK Neutral 70 - - 0.6 - 3.9 42.8 0.6 13.3
CRPBK Buy 381 453 18.9 0.5 0.6 3.6 8.3 0.8 14.4
DENABK Accumulate 96 101 6.0 0.5 0.6 3.6 4.3 0.8 15.3
IDBI Accumulate 88 96 8.6 0.5 0.5 3.8 24.5 0.9 13.5
INDBK Buy 163 200 22.7 0.6 0.7 3.9 6.5 1.0 14.9
IOB Accumulate 68 78 15.0 0.4 0.5 3.3 53.3 0.7 13.1
J&KBK Neutral 1,292 - - 1.0 - 6.4 (5.2) 1.2 16.0
OBC Neutral 279 - - 0.6 - 4.4 17.5 0.8 13.1
PNB Accumulate 786 889 13.2 0.7 0.8 4.5 12.4 1.0 16.3
SBI Accumulate 2,331 2,567 10.1 1.3 1.4 8.3 16.4 1.0 17.0
SYNBK Accumulate 120 130 8.5 0.6 0.7 4.2 (3.5) 0.7 15.2
UCOBK Neutral 68 - - 0.7 - 4.7 36.9 0.6 12.6
UNBK Accumulate 243 264 8.7 0.7 0.8 5.1 21.2 0.8 15.3
UTDBK Accumulate 60 68 12.3 0.4 0.5 2.9 40.4 0.7 14.7
VIJAYA Neutral 52 - - 0.6 - 4.7 21.2 0.5 11.7
Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF
Company Background
Axis Bank is India's third-largest private sector bank after ICICI Bank and HDFC
Bank. The bank was promoted by government institutions, led by UTI (SUUTI holds20.8% stake currently, which will eventually be divested). The bank has an
extensive network of 1,947 branches and 11,245 ATMs spread across 1,263
centers (~55% in metro and urban regions). The bank's strong growth has been
backed by robust retail branch expansion, strong corporate relationships and a
wide range of fee income products.
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Income statement (Standalone)
Y/E March (` cr) FY09 FY10 FY11 FY12 FY13 FY14E FY15ENet Interest Income 3,686 5,004 6,563 8,018 9,666 11,857 13,953- YoY Growth (%) 42.6 35.8 31.1 22.2 20.6 22.7 17.7Other Income 2,834 3,946 4,632 5,420 6,551 7,198 8,756- YoY Growth (%) 57.8 39.2 17.4 17.0 20.9 9.9 21.6
Operating Income 6,520 8,950 11,195 13,438 16,217 19,055 22,710- YoY Growth (%) 48.8 37.3 25.1 20.0 20.7 17.5 19.2
Operating Expenses 2,858 3,710 4,779 6,007 6,914 8,162 9,999- YoY Growth (%) 32.6 29.8 28.8 25.7 15.1 18.1 22.5
Pre - Provision Profit 3,662 5,241 6,416 7,431 9,303 10,893 12,711- YoY Growth (%) 64.5 43.1 22.4 15.8 25.2 17.1 16.7
Prov. & Cont. 877 1,389 1,280 1,143 1,750 1,631 1,914- YoY Growth (%) 51.3 58.5 (7.9) (10.7) 53.1 (6.8) 17.3
Profit Before Tax 2,785 3,851 5,136 6,288 7,553 9,262 10,797- YoY Growth (%) 69.2 38.3 33.3 22.4 20.1 22.6 16.6
Prov. for Taxation 970 1,337 1,747 2,046 2,373 3,148 3,670- as a % of PBT 34.8 34.7 34.0 32.5 31.4 34.0 34.0
PAT 1,815 2,515 3,388 4,242 5,179 6,114 7,127- YoY Growth (%) 69.5 38.5 34.8 25.2 22.1 18.0 16.6
Balance sheet (Standalone)Y/E March (` cr) FY09 FY10 FY11 FY12 FY13 FY14E FY15EShare Capital 359 405 411 413 468 468 468Reserve & Surplus 9,855 15,639 18,588 22,395 32,640 37,367 42,890
Deposits 117,374 141,300 189,238 220,104 252,614 300,610 369,751
- Growth (%) 33.9 20.4 33.9 16.3 14.8 19.0 23.0
Borrowings 10,185 10,014 19,275 23,498 33,641 39,620 48,091
Tier 2 Capital 5,334 7,156 6,993 10,574 10,310 10,052 9,801
Other Liab. & Prov. 4,613 6,134 8,209 8,643 10,888 12,964 15,835
Total Liabilities 147,721 180,648 242,713 285,628 340,561 401,081 486,834Cash Balances 9,419 9,482 13,886 10,703 14,792 13,527 16,639
Bank Balances 5,598 5,722 7,522 3,231 5,643 6,646 8,067
Investments 46,330 55,975 71,992 93,192 113,738 131,566 155,714
Advances 81,557 104,341 142,408 169,760 196,966 238,329 293,144
- Growth (%) 36.7 27.9 36.5 19.2 16.0 21.0 23.0
Fixed Assets 1,073 1,222 2,273 2,259 2,356 2,691 3,168
Other Assets 3,744 3,906 4,632 6,483 7,067 8,322 10,102
Total Assets 147,721 180,648 242,713 285,628 340,561 401,081 486,834- Growth (%) 34.8 22.3 34.4 17.7 19.2 17.8 21.4
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Ratio analysis (Standalone)
Y/E March FY09 FY10 FY11 FY12 FY13 FY14E FY15EProfitability ratios (%)NIMs 3.0 3.1 3.2 3.1 3.2 3.3 3.2Cost to Income Ratio 43.8 41.4 42.7 44.7 42.6 42.8 44.0
RoA 1.4 1.5 1.6 1.6 1.7 1.6 1.6
RoE 19.1 19.2 19.3 20.3 18.5 17.2 17.6
B/S ratios (%)CASA Ratio 43.1 46.7 41.1 41.5 44.4 44.2 44.2
Credit/Deposit Ratio 69.5 73.8 75.3 77.1 78.0 79.3 79.3
CAR 13.7 15.8 12.7 13.7 15.2 14.3 13.2
- Tier I 9.3 11.2 9.4 9.4 11.6 11.3 10.7
Asset Quality (%)Gross NPAs 1.1 1.3 1.1 1.1 1.2 1.8 2.1
Net NPAs 0.4 0.4 0.3 0.3 0.4 0.4 0.5
Slippages 1.5 2.2 1.4 1.3 1.2 1.3 1.3
Loan Loss Prov. /Avg. Assets 0.6 0.8 0.5 0.3 0.4 0.4 0.3
Provision Coverage 63.6 72.4 80.9 81.0 79.0 80.0 80.0
Per Share Data (`)EPS 50.6 62.1 82.5 102.7 110.7 130.7 152.3
ABVPS (75% cover.) 281.6 393.8 462.5 551.5 705.2 808.5 926.5
DPS 10.0 12.0 14.0 16.0 18.0 25.5 29.5
Valuation RatiosPER (x) 29.7 24.2 18.2 14.6 13.6 11.5 9.9
P/ABVPS (x) 5.3 3.8 3.3 2.7 2.1 1.9 1.6
Dividend Yield 0.7 0.8 0.9 1.1 1.2 1.7 2.0
DuPont AnalysisNII 2.9 3.0 3.1 3.0 3.1 3.2 3.1
(-) Prov. Exp. 0.7 0.8 0.6 0.4 0.6 0.4 0.4
Adj. NII 2.2 2.2 2.5 2.6 2.5 2.8 2.7
Treasury 0.2 0.4 0.2 0.0 0.2 0.1 0.1
Int. Sens. Inc. 2.4 2.7 2.7 2.6 2.8 2.8 2.8
Other Inc. 2.0 2.0 2.0 2.0 1.9 1.9 1.9
Op. Inc. 4.4 4.6 4.7 4.7 4.6 4.7 4.7
Opex 2.2 2.3 2.3 2.3 2.2 2.2 2.3PBT 2.2 2.3 2.4 2.4 2.4 2.5 2.4
Taxes 0.8 0.8 0.8 0.8 0.8 0.8 0.8
RoA 1.4 1.5 1.6 1.6 1.7 1.6 1.6Leverage 13.6 12.5 12.1 12.6 11.2 10.5 10.9
RoE 19.1 19.2 19.3 20.3 18.5 17.2 17.6
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Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Axis Bank
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No
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