Ahost of brokerages that attended Axis Bank’s Analyst Day meet, with the bank management represented by Managing Director Amitabh Chaudhary, said the lender remains upbeat about maintaining growth as well as net interest margin (NIM) near the prevailing levels. They said Axis Bank Ltd is focused on ramping Axis 2.0 – a fully digital bank within the bank with a comprehensive end-to-end digital solutions. Axis Bank, they said, has made heavy tech investments over the past few years to become a digital consumer lending powerhouse and that it is going in the right direction. Brokerages largely maintained their ‘Buy’ recommendations on the counter post the analyst meet.
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“Through diverse digital capabilities and strategic partnerships within the ecosystem, Axis Bank is experiencing significant growth and establishing itself as a robust customer acquisition engine. Axis Bank has been reporting strong growth in the retail and mid-corporate segment, which along with MSME would remain the key growth driver. The bank suggested continued investment in the business, given a favourable environment, and thus, enabling 4-6 per cent higher growth than the system over the medium term,” said Motilal Oswal Securities.
The brokerage expects Axis Bank to deliver return on asset (RoA) of 1.9 per cent and return on equity (RoE) of 16.6 per cent in FY25, as it suggested a target of Rs 1,150 on the stock.
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Nuvama Institutional Equities said the private lender remains focussed on becoming an all-weather franchise with sustainable returns, improving deposit quality, and best-in-class digital capabilities with industry-leading apps/platforms. The management, it said, is confident of sustaining an 18 per cent RoE, and reiterated that Axis Bank does not need to raise fresh equity even after the RBI’s new norms.
“The Citi acquisition has enabled the bank to become a “premium customer” franchise in cards and wealth. We reiterate ‘BUY’ (target price Rs 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,” it said.
Nirmal Bang Institutional Equities, meanwhile, said that Axis Bank plans to hike rates in the unsecured retail loans category and loans to NBFCs in order to counter the impact of rise in risk weights.
Since its capital position is comfortable with CET-1 at 13.28 per cent, it has no immediate need for raising fresh capital.
“We expect the bank to report ROA/ROE of 1.9 per cent/18.4 per cent by FY25E, which will be led by 16.7 per cent loan CAGR, stable NIM, improving cost ratios and lower credit cost. We maintain our BUY rating with a target price of Rs 1,181,” it said.
Morgan Stanley finds the stock worth Rs 1,275. Jefferies has a target of Rs 1,250 on the stock. CLSA see the Axis Bank stock at Rs 1,200.
