Axis Bank analyst meet: To focus on strong digi-retail banking; analysts bullish on stock amid reasonable valuations
- Axis Bank analyst day: Axis Bank focuses on digital journeys and customer experiences at analyst day, achieves 18% RoE over last five quarters. Brokerages reiterate 'buy' rating on Axis Bank stock, highlighting advancements in GPS strategy and strong digital capabilities.
Axis Bank analyst day: Brokerages have maintained a "buy" rating on Axis Bank's stock following its analyst day, and they estimate a 13% to 23% upside for the stock.
According to reports, providing comprehensive digital journeys and improving customer experiences were the main priorities of Axis Bank. Additionally, Amitabh Chaudhry, MD and CEO, as well as functional and business heads, provided an update on the structural alterations and transformational projects the bank has undertaken in recent years during the Axis Bank analyst day. As per brokerage reports, Axis Bank has achieved a consolidated return on equity (RoE) of 18% over the last five quarters, and it believes this level of performance can be sustained.
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On Friday's session Axis Bank share price was trading at ₹1,004.95 apiece, up 0.59% higher on BSE at 10:53 IST.
According to technical analysts, Axis Bank share prices have not seen major traction during the year, its up around 7% for the year and for the entire year prices have traded in a range . Going ahead ₹950 is a support zone, and dip towards it would be buying opportunity whereas ₹1,050 is acting as resistance since last two quarters a move beyond which a strong traction on upside would resume where possibly ₹1,250 - ₹1,300 would be seen.
Let's take a look at what the domestic brokerages have to say following the Axis Bank analyst day:
Nuvama Institutional Equities
The brokerage said that at the Axis Bank analyst day, the private lender provided further details about its GPS strategy's advancement. The bank's goals are still to become an all-weather franchise with sustainable returns, enhance the quality of deposits, and provide best-in-class digital services using cutting-edge platforms and apps. In addition to reiterating that Axis Bank does not require new equity financing even in light of the RBI's new guidelines, management expressed confidence in maintaining an 18% RoE. The bank is now able to offer cards and wealth as a "premium customer" franchise thanks to the Citi acquisition.
“We reiterate ‘BUY’ (target price ₹1,130) as we believe the efforts made by management over the last five years would continue to pay off in the longer term even if there is some short-term earnings volatility,” the brokerage said.
Brokerage firm Nuvama has maintained a buy call on the stock with a target price of ₹1,130, implying an 13% upside potential.
Motilal Oswal Financial Services
As per the brokerage, the management exhibited their continuous efforts towards constructing strong digital capabilities to facilitate long-term business expansion. The main priorities are improving customer experiences and providing comprehensive digital journeys. Axis Bank is expanding rapidly and solidifying its position as a strong customer acquisition engine by virtue of its wide range of digital capabilities and strategic alliances within the ecosystem. Retail and mid-corporate growth, along with MSME growth, have been particularly robustly reported by Axis Bank.
"Axis Bank remains focused on building a Stronger, Consistent, and Sustainable franchise. The bank will see a reduction in capital, due to introduction of the new Risk Weight Assets regulations; however, the bank is already accreting capital and may catch up the lost capital through internal accruals. And thereby, it may not see a requirement to raise capital in the near term.
The asset quality issues too are behind which will keep the slippages and credit cost under control. NIMs have shown improvement and the bank believes that it has sufficient levers to maintain healthy margins. The bank eluded to continue making business investments due to favourable macro which will enable loan growth at 4-6% higher than the system over the medium term. We estimate Axis Bank to deliver FY25E RoA/RoE of 1.9%/16.6%. We reiterate our BUY rating with a target price of ₹1,150," the brokerage said.
With a target price of ₹1,150, brokerage house Motilal Oswal has maintained a buy call on the stock, suggesting a 15% upside potential.
Antique Stock Broking
As per the brokerage's report, near-term earnings are expected to remain strong, with asset quality issues having been resolved and credit cycle tailwinds in the form of better NIM of +4% (which helped achieve the fast pace target of 3.8% and should sustain at high levels), low credit cost, and sustained loan growth.
"Over the medium term, management’s focus would be to strengthen the liability franchise, build customer journeys, increase its footprint in rural banking, and accelerate partnerships. Digital acquisition augurs well for the bank and the rightful execution would provide a strong and sustainable RoE profile. Maintain BUY,” the brokerage said.
The stock continues to be rated as a buy by brokerage house Antique Stock Broking, with an upside potential of 22.6% and a target price of ₹1,225.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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