scorecardresearchICICI Securities is ‘bullish’ on this bank, says may rally over 60%

ICICI Securities is ‘bullish’ on this bank, says may rally over 60%

Updated: 05 Jul 2022, 02:12 PM IST

Axis bank net profit increased by 50% year on year (YoY) to Rs. 4,417.7 crore, up from Rs. 2,941 crore in the same quarter last year. Net interest income (NII) increased by 17% year on year to 8,819 crore. The net interest margin (NIM) for the quarter came in at 3.49 per cent.

Axis Bank's credit card base will grow by 31%, with significant increases in customer spending.

Axis Bank's credit card base will grow by 31%, with significant increases in customer spending.

Banking stocks were under selling pressure despite posting strong March quarter numbers. This is because foreign investors hold the largest share in the banking sector, and they have been withdrawing from Indian markets since October 2021 on the back of commodity inflation, fears of recession and high-interest rates.

Axis Bank's stock has dropped more than 3.3 per cent in the last month. At 01:00 pm (IST), the share price was up 0.30% to Rs. 656.30 on the BSE in Tuesday's trade. If today's price is taken into consideration, the stock has fallen 32.92% from its 52-week high of Rs. 872. Further, the stock is down 13.88per cent in the last one year. It is down 9.67% year to date.

However, despite continuous sell-off pressure for the last three and a half months, domestic brokerage firm ICICI Securities is bullish on the stock and has given a "BUY" rating with a target price of 1,050/share, which hints toward an upside of 60.55 per cent from its latest closing price of 654.35.

ICICI Securities said that Axis Bank’s FY22 annual report is themed ‘Open to a world of possibilities, where Axis is setting out on a journey of distinctiveness to become an open, customer-centric, and future-ready bank that will offer its customers a world of new possibilities." The CEO’s message states that growth momentum is tremendous across focus segments. Axis Bank remains optimistic about delivering steady upward movement on business/financial metrics.

Stock Price chart of Axis Bank

In Mar ’22, Axis signed definitive agreements to acquire Citibank’s India consumer business for a purchase consideration of 12,235 crore. The proposed transaction will add 4% to the bank’s advance base, 7% to deposits, a 12% increase in CASA, and a 31% addition to the credit card base, according to the report.

"Post the acquisition, Axis Bank will have 28.5 million savings accounts, 2.3 lakh+ Burgundy customers and 10.6 million cards. "It also gets access to relationship managers, Citi's phone banking services, an experienced retail team, robust processes and operations," said ICICI Securities.

Furthermore, the brokerage firm said, Axis has accelerated the growth momentum across various businesses and has gained market share in focus segments and improved the key operating metrics.

Axis achieved several all-time yearly highs, including the addition of 8.6 million (up 29% YoY) new liability relationships, record retail loan disbursements, and the issuance of 2.67 million credit cards, it said.

It continued to strengthen market share in cards and payments businesses as it focused on scaling up the segment with substantially lower risks through innovative product propositions and partnerships, led Known-to-Bank (KTB) strategy.

It entered into a strategic partnership with Airtel that will help it offer credit cards and various digital financial offerings to Airtel’s 340 million customers.

Axis is the second-largest merchant-acquiring bank with an installed capacity of 1 million+ terminals, acquiring an incremental market share of 30% in FY22 and an outstanding market share of 16%, according to ICICI securities.

Meanwhile, global brokerage firm Morgan Stanley maintained its "overweight" rating on the back of the lender's robust asset quality, improved balance sheet, and revenue granularity. The brokerage firm has a target price of 910 on Axis Bank's shares, an upside of 40 per cent from its current market price.

On the other hand, Ventura Securities has a 24-month target price of 901 on Axis Bank, implying an upside potential of 38 per cent from its previous closing price. 

An average of 42 analysts polled by MintGenie have a 'buy' call on the stock.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.

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First Published: 05 Jul 2022, 02:12 PM IST