Axis Bank share price set to soar on D-Street - Buy it, before it's too late

Axis Bank has been referred to being amongst the best bets in banking sector. The stock currently trades near Rs 800 per piece. On Thursday, the stock finished at Rs 800.35 per piece higher by Rs 11.40 or 1.44%. The overall gain today was nearly 2%, as the bank did touch an intraday high of Rs 806.65 per piece. Experts are optimistic on this bank, as its annual report reveals the lender’s focus on improving its earnings metrics and asset quality. Axis Bank targets an RoE of 18% by FY22, with credit cost, opex and business mix identified as the key drivers for the achievement of this goal. That said, a buy rating has been given on Axis Bank from pool of experts. If shares are bought at the current level, the bank has potential for rising between 15% to 18%. 

Here’s what the experts say:

Motilal Oswal:

Nitin Aggarwal and Alpesh Mehta, Research Analyst here say, “AXSB has been aiming for sustained improvement in its earnings profile under the new management and has delivered a steady performance during FY19 with sharp improvement in coverage ratio. The NPL cycle has shown improvement signs and we estimate earnings to recover though credit cost trajectory can still remain uneven given sluggish macro. We thus estimate RoA/RoE to improve to 1.4%/17.0% by FY21 and maintain our Buy rating with a TP of INR925 (2.7x FY21E ABV + INR42 for subsidiaries)”

HDFC Securities:

Darpin Shah and Aakash Dattani, Research Analyst here said, “Over FY19, AXSB has demonstrated meaningful improvement in performance metrics. Profitability improved for the retail and wholesale businesses (loss in FY17 & 18). After growing briskly over FY17- 18, SA traction slowed for the bank and system. With moderating slippages and LLPs, AXSB changed course over FY19 towards normalised earnings and RoAAs. Improving asset quality (with rising coverage), better risk practices, focus on high yielding retail products and cost consciousness will drive earnings. Maintain BUY with SOTP value of Rs 895 (2.8x FY21E ABV of Rs 309 + Rs 30 for subs).”

Macquarie: 

Expert here in their note said, “Upgrade to OP with a TP of Rs925 top pick among Indian banks after ICICI Bank (ICICIBC IN, Rs430.85, OP, TP: Rs525.00). While it will take time for Axis Bank to be the next HDFC Bank (HDFC IN, Rs2,415, OP, TP: Rs2,820), we do like the stock from a corporate recovery perspective with credit costs normalising. Our meeting with Ganesh Sankaran (profile here ), head of the wholesale banking coverage group at Axis Bank, revealed that there is a concerted effort to deepen relationships with corporates, expand working capital finance and transaction banking/flow opportunities with existing corporates. There is also a drive to significantly de-risk the balance sheet. We like this new Axis Bank and while there are medium-term challenges in reaching 18% ROE, we will keenly watch for ROA improvement. We upgrade Axis Bank to Outperform from Neutral and raise our TP by 22% to Rs925.”