Fundamental Result Update

Axis Bank Ltd Q3FY20 - Result Update



Axis Bank Q3FY20 earnings came in line with street as well as our expectations in terms of core banking performance as the NII increased by 5.8% QoQ / 15.2%. There was a miss on profitability due to elevated credit cost. The bank has maintained superior margins. Capital position of the bank continues to remain strong with CAR at 18.2%.

 

Valuation and View: In a midst of challenging environment and economic slowdown, Axis Bank recorded strong loan growth, led by retail credit business. Slippages remained elevated during the quarter as BB & below rated book formed the bulk of the corporate slippages. Operating performance of the bank was in-line with our estimates. With rising stress in the system and higher slippages, we believe near term prospect remain challenging for the bank on asset quality front. Hence, we increased the provisioning and lowered our PAT estimates. At CMP of Rs 713 the stock is available at its FY21E P/ABV of 2.9(x). We maintain our Hold rating on the stock assigning P/ABV of 3.2x to its FY21E BVPS to arrive at a fair value of Rs 793 per share, an upside of 11%.


Tags: ResultsFundamentalResult Update


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