Axis Bank: Performance Highlights
Axis Bank: Performance Highlights
Axis Bank: Performance Highlights
Axis Bank
Performance Highlights
Particulars (` cr) NII Pre-prov. profit PAT 1QFY13 2,180 1,964 1,154 4QFY12 2,146 2,038 1,277 % chg (qoq) 1.6 (3.6) (9.7) 1QFY12 1,724 1,558 942 % chg (yoy) 26.4 26.0 22.4
BUY
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Banking 42,394 1.2 1367/785 484,136 10 17,105 5,193 AXBK.BO AXSB@IN
`1,023 `1,485
12 Months
For 1QFY2013, Axis Bank reported 22.4% yoy growth in its net profit to `1,154cr, which was in-line with our estimates. Key highlights of the results were sequential compression in NIMs by 18bp, sequential increase in Gross and Net NPA levels and subdued fee income growth on a high base of last year. NIMs decline sequentially on lower CASA; NPA levels rise on lower recoveries and upgrades: The banks loan book grew by a healthy 29.8% yoy, while deposits grew by 21.3% yoy. The growth in loan book was primarily on account of 50.2% yoy increase in retail book, with both home and auto loans growing significantly (on a low base). On a daily average basis, saving account deposits grew by 22% yoy, while current account deposits increased by 7% yoy. Lower CASA ratio and higher PSL requirements resulted in 18bp qoq decline in the banks reported NIMs. Fee income growth was subdued during the quarter, with a growth of 8% yoy, on account of the high base of corporate fee income. The slippages for the bank for 1QFY2013 came in at 1.1%, lowest in last four quarters (`456cr compared to `514cr in 4QFY2012 and `296cr in 1QFY2012), however sharp sequential decline in recoveries and upgrades (`62cr compared to `593cr in 4QFY2012 and quarterly average of `184cr since 1QFY2011), led to higher sequential gross NPA levels (higher by 15.8% qoq on an absolute basis) for the bank. The banks PCR declined to 79.0% from 81.0% in 4QFY2012, leading to 28.0% sequential increase in net NPA levels to `605cr. The bank restructured loans worth ~`628cr taking its outstanding restructured book to `3,827cr. Outlook and valuation: Axis Bank is trading at 1.4x FY2014E ABV 57% discount to HDFC Bank vs. an average discount of 34% over past five years. We remain positive on the bank, owing to its attractive CASA franchise, multiple sources of sustainable fee income and healthy growth outlook. We maintain our Buy recommendation on the stock with a target price of `1,485.
Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 37.4 13.4 36.0 12.8
3m (1.5) (15.5)
Key financials
Y/E March (` cr) NII % chg Net profit % chg NIM (%) EPS (`) P/E (x) P/ABV (x) RoA (%) RoE (%)
Source: Company, Angel Research
FY2011 6,563 31.1 3,388 34.8 3.2 82.5 12.4 2.2 1.6 19.3
FY2012 8,018 22.2 4,242 25.2 3.1 102.7 10.0 1.9 1.6 20.3
FY2013E 9,606 19.8 5,010 18.1 3.1 117.3 8.7 1.6 1.6 20.1
FY2014E 11,940 24.3 6,110 21.9 3.2 143.1 7.2 1.4 1.6 20.8
Vaibhav Agrawal
022 3935 7800 Ext: 6808 [email protected]
Varun Varma
022 3935 7800 Ext: 6847 [email protected]
Sourabh Taparia
022 3935 7800 Ext: 6872 [email protected]
1QFY13 6,483 4,625 1,806 23 29 4,303 2,180 1,336 1,185 1,154 150 31 3,515 1,552 583 969 1,964 259 261 (2) 1,705 551 1,154
4QFY12 6,060 4,258 1,738 24 41 3,914 2,146 1,588 1,442 1,327 146 115 3,734 1,696 530 1,167 2,038 139 127 12 1,898 621 1,277
% chg (qoq) 7.0 8.6 4.0 (4.0) (29.1) 9.9 1.6 (15.9) (17.8) (13.0) 2.9 (73.1) (5.8) (8.5) 10.0 (16.9) (3.6) 85.8 105.5 (117.6) (10.2) (11.2) (9.7)
1QFY12 4,881 3,470 1,333 48 31 3,157 1,724 1,168 1,098 1,057 70 41 2,892 1,333 510 824 1,558 176 153 23 1,383 440 942
% chg (yoy) 32.8 33.3 35.5 (52.2) (4.8) 36.3 26.4 14.4 8.0 9.2 113.9 (24.0) 21.6 16.4 14.2 17.7 26.0 47.2 70.6 (109.5) 23.3 25.2 22.4
FY2012 21,995 15,379 6,394 98 123 13,977 8,018 5,420 5,059 4,727 362 332 13,438 6,007 2,080 3,927 7,431 1,143 861 282 6,288 2,046 4,242
FY2011 15,155 10,403 4,439 183 130 8,592 6,563 4,632 4,135 3,790 497 345 11,195 4,779 1,614 3,166 6,416 1,280 955 325 5,136 1,747 3,388
% chg (yoy 45.1 47.8 44.1 (46.1) (6.0) 62.7 22.2 17.0 22.3 24.7 (27.2) (3.9) 20.0 25.7 28.9 24.1 15.8 (10.7) (9.8) (13.2) 22.4 17.1 17.1
Actual 2,180 1,336 3,515 1,552 1,964 259 1,705 551 1,154
Estimates 2,172 1,450 3,622 1,701 1,922 242 1,680 545 1,135
Var. (%) 0.3 (7.9) (3.0) (8.8) 2.2 7.1 1.5 1.1 1.6
1QFY13 4QFY12 % chg (qoq) 1QFY12 % chg (yoy) 171,146 169,760 222,631 220,104 76.9 34,165 52,777 86,942 39.1 13.0 9.0 6.7 3.4 44.1 2,092 1.1 605 0.3 79.0 1.1 0.4 77.1 39,754 51,668 91,422 41.5 13.7 9.5 6.5 3.6 45.4 1,806 0.9 473 0.3 81.0 1.4 0.2 0.8 131,900 1.1 183,597 (25)bp (14.1) 2.1 (4.9) (248)bp (63)bp (43)bp 25bp (18)bp (129)bp 15.8 12bp 28.0 6bp (200)bp (37)bp 18bp 71.8 31,515 42,899 74,414 40.5 12.5 9.4 6.1 3.3 46.1 1,573 1.1 462 0.3 80.0 0.8 0.3 29.8 21.3 503bp 8.4 23.0 16.8 (148)bp 50bp (34)bp 57bp 9bp (197)bp 33.0 0bp 30.8 0bp (100)bp 24bp 11bp
CASA deposits de-grew sequentially by 4.9% mainly on account of 14.1% decline witnessed in cyclical current account balances, even as savings deposits growth remained muted at 2.1% qoq. Period-end CASA ratio declined sequentaily by almost 250bp to 39.1%. On a daily average basis, saving account deposits grew by 22% yoy, while current account deposits increased by 7% yoy. The bank has been focussing on building a stronger retail term deposits portfolio, as evident from the 44.2% yoy growth in this deposit franchise. As of 1QFY2013, retail term deposits constitute 39.3% ( 37.2% as of 4QFY2012) of total term deposits.
1QFY13 4QFY12 % chg (qoq) 1QFY12 % chg (yoy) 1,154 409 238 63 110 12 322 60 128 134 150 31 1,336 1,185 1,327 442 249 117 128 13 377 138 117 122 146 115 1,588 1,442 (13.0) (7.5) (4.4) (46.2) (14.1) (7.7) (14.6) (56.5) 9.4 9.8 2.9 (73.1) (15.9) (17.8) 1,057 413 210 46 95 16 276 54 89 133 70 41 1,168 1,098 9.2 (1.0) 13.3 37.0 15.8 (25.0) 16.7 11.1 43.8 0.8 113.9 (24.0) 14.4 8.0
1.1 0.3
1.1 0.3
1.1 0.4
0.9 0.3
1.1 0.3
55.0 1QFY13
0.3 -
1QFY12
2QFY12
3QFY12
4QFY12
47.0
1,411
1,446
1,493
1,622
1,665
800 400
2,500 -
Investment arguments
Branch expansion to support faster market share gains
We believe Axis Banks reasonable capital adequacy positions it for market share gains with ~500bp higher growth than industry over FY201214. The bank has expanded its network at a 31.6% CAGR since FY200312, driving a four-fold increase in its CASA market share to 4.7% by FY2012. In our view, such gains will continue going forward as well, especially as network expansion (200-250 additions, about 1520% yoy) remains strong.
Earlier estimates FY2013 22.0 23.0 40.8 3.2 21.6 23.1 23.1 1.6 80.9 FY2014 23.0 23.0 40.8 3.3 20.3 24.0 24.0 1.6 80.4
Revised estimates FY2013 22.0 23.0 39.4 3.1 17.2 17.6 17.6 1.6 79.0 FY2014 23.0 23.0 39.0 3.2 20.3 22.8 22.8 1.6 78.6
Earlier estimates 9,897 6,590 16,488 7,395 9,093 1,611 7,482 2,427 5,054
FY2013 Revised Var. (%) estimates 9,606 (2.9) 6,355 15,961 7,064 8,897 1,481 7,416 2,406 5,010 (3.6) (3.2) (4.5) (2.2) (8.1) (0.9) (0.9) (0.9)
Earlier estimates 12,370 7,927 20,297 9,169 11,128 1,954 9,174 2,977 6,198
FY2014 Revised Var. (%) estimates 11,940 (3.5) 7,643 19,583 8,675 10,908 1,864 9,044 2,934 6,110 (3.6) (3.5) (5.4) (2.0) (4.6) (1.4) (1.4) (1.4)
Aug-08
Dec-10
Apr-06
Mar-09
Oct-09
Jul-11
Nov-06
Feb-12
(300)
May-10
Nov-07
Feb-09
Sep-08
May-10
Oct-10
Jun-07
Sep-12
Jan-12 Jun-12
Jun-07
Jan-07
Jan-08
Aug-06
Dec-09
(15.0) (30.0)
(%)
Mar-11
Aug-11
Apr-08
Jul-09
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 holds 23.5% stake currently, which will eventually be divested). The bank has an extensive network of 1,681 branches and 10,337 ATMs spread across 1,020 centers (~58% 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
Y/E March (` cr) Net Interest Income - YoY Growth (%) Other Income - YoY Growth (%) Operating Income - YoY Growth (%) Operating Expenses - YoY Growth (%) Pre - Provision Profit - YoY Growth (%) Prov. & Cont. - YoY Growth (%) Profit Before Tax - YoY Growth (%) Prov. for Taxation - as a % of PBT PAT - YoY Growth (%) FY08 2,585 65.0 1,795 77.7 4,381 70.0 2,155 77.4 2,226 63.4 579 58.2 1,646 65.3 575 35.0 1,071 62.5 FY09 3,686 42.6 2,834 57.8 6,520 48.8 2,858 32.6 3,662 64.5 877 51.3 2,785 69.2 970 34.8 1,815 69.5 FY10 5,004 35.8 3,946 39.2 8,950 37.3 3,710 29.8 5,241 43.1 1,389 58.5 3,851 38.3 1,337 34.7 2,515 38.5 FY11 6,563 31.1 4,632 17.4 11,195 25.1 4,779 28.8 6,416 22.4 1,280 (7.9) 5,136 33.3 1,747 34.0 3,388 34.8 FY12 8,018 22.2 5,420 17.0 13,438 20.0 6,007 25.7 7,431 15.8 1,143 (10.7) 6,288 22.4 2,046 32.5 4,242 25.2 FY13E 9,606 19.8 6,355 17.2 15,961 18.8 7,064 17.6 8,897 19.7 1,481 29.5 7,416 17.9 2,406 32.4 5,010 18.1 FY14E 11,940 24.3 7,643 20.3 19,583 22.7 8,675 22.8 10,908 22.6 1,864 25.9 9,044 21.9 2,934 32.4 6,110 21.9
Balance sheet
Y/E March (` cr) Share Capital Reserve & Surplus Deposits - Growth (%) Borrowings Tier 2 Capital Other Liab. & Prov. Total Liabilities Cash Balances Bank Balances Investments Advances - Growth (%) Fixed Assets Other Assets Total Assets - Growth (%) FY08 358 8,411 49.1 5,624 3,429 4,130 FY09 359 9,855 33.9 10,185 5,334 4,613 FY10 405 15,639 20.4 10,014 7,156 6,134 FY11 411 18,588 33.9 19,275 6,993 8,209 FY12 413 22,395 16.3 23,498 10,574 8,643 FY13E 427 26,550 23.0 28,790 12,900 10,564 FY14E 427 31,271 23.0 35,252 15,867 12,699
109,578 147,721 180,648 242,713 285,628 349,960 428,512 7,306 5,199 33,705 59,661 61.8 923 2,785 9,419 5,598 46,330 36.7 1,073 3,744 9,482 5,722 55,975 27.9 1,222 3,906 13,886 7,522 71,992 36.5 2,273 4,632 10,703 3,231 10,829 3,959 13,320 4,847
93,192 117,437 142,688 19.2 2,259 6,483 22.0 2,685 7,943 23.0 3,189 9,726
109,578 147,721 180,648 242,713 285,628 349,960 428,512 49.6 34.8 22.3 34.4 17.7 22.5 22.4
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Ratio analysis
Y/E March Profitability ratios (%) NIMs Cost to Income Ratio RoA RoE B/S ratios (%) CASA Ratio Credit/Deposit Ratio CAR - Tier I Asset Quality (%) Gross NPAs Net NPAs Slippages Loan Loss Prov. /Avg. Assets Provision Coverage Per Share Data (`) EPS ABVPS (75% cover.) DPS Valuation Ratios PER (x) P/ABVPS (x) Dividend Yield DuPont Analysis NII (-) Prov. Exp. Adj. NII Treasury Int. Sens. Inc. Other Inc. Op. Inc. Opex PBT Taxes RoA Leverage RoE 2.8 0.6 2.2 0.2 2.4 1.7 4.2 2.4 1.8 0.6 1.2 15.0 17.6 2.9 0.7 2.2 0.2 2.4 2.0 4.4 2.2 2.2 0.8 1.4 13.6 19.1 3.0 0.8 2.2 0.4 2.7 2.0 4.6 2.3 2.3 0.8 1.5 12.5 19.2 3.1 0.6 2.5 0.2 2.7 2.0 4.7 2.3 2.4 0.8 1.6 12.1 19.3 3.0 0.4 2.6 0.0 2.6 2.0 4.7 2.3 2.4 0.8 1.6 12.6 20.3 3.0 0.5 2.6 0.1 2.6 1.9 4.6 2.2 2.3 0.8 1.6 12.8 20.1 3.1 0.5 2.6 0.1 2.6 1.9 4.6 2.2 2.3 0.8 1.6 13.3 20.8 34.2 4.2 0.6 20.2 3.6 1.0 16.5 2.6 1.2 12.4 2.2 1.4 10.0 1.9 1.6 8.7 1.6 2.2 7.2 1.4 2.7 29.9 241.6 6.0 50.6 281.6 10.0 62.1 393.8 12.0 82.5 462.5 14.0 102.7 551.5 16.0 117.3 631.8 23.0 143.1 742.4 28.0 0.8 0.4 1.0 0.4 49.8 1.1 0.4 1.5 0.6 63.6 1.3 0.4 2.2 0.8 68.2 1.1 0.3 1.4 0.5 74.3 1.1 0.3 1.3 0.3 73.8 0.9 0.2 1.6 0.4 79.0 0.8 0.2 1.6 0.4 78.6 45.7 68.1 13.7 10.2 43.1 69.5 13.7 9.3 46.7 73.8 15.8 11.2 41.1 75.3 12.7 9.4 41.5 77.1 13.7 9.4 39.4 76.5 13.5 9.2 39.0 76.5 13.3 8.9 2.9 49.2 1.2 17.6 3.0 43.8 1.4 19.1 3.1 41.4 1.5 19.2 3.2 42.7 1.6 19.3 3.1 44.7 1.6 20.3 3.1 44.3 1.6 20.1 3.2 44.3 1.6 20.8 FY08 FY09 FY10 FY11 FY12 FY13E FY14E
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Ratings (Returns):
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