15 Mar , 2024 By : Debdeep Gupta
While Axis Bank may go through a period of loan growth moderation, book value compounding should continue to be strong, say analysts, Global brokerage firm Nomura shared a 'buy' call on Axis Bank on attractive valuations, with a target price of Rs 1,250 per share, implying an upside of over 20 percent from the current level (Rs 1,034).
So far this year, the stock of this private sector lender has declined over 5 percent, as against a 4 percent drop in the Bank Nifty index. Axis Bank shares had hit a 52-week high of Rs 1,151 per share on December 5, 2023.,
Nomura analysts expect Axis Bank to report a healthy return on assets (RoAs) or return on equity (RoE) of 1.7 percent or 18 percent and strong earnings per share (EPS) CAGR of 16 percent over FY24-26F.
"While Axis Bank may go through a period of loan growth moderation, book value compounding should continue to be strong and we continue to like the franchise," the brokerage firm highlighted.
The management indicated improvement in net interest margins (NIMs) led by improving its balance sheet mix, decreasing its overseas loan book, reducing exposure to low-yielding RIDF bonds, and strengthening its retail deposit franchise.
Having said that, analysts said that Axis Bank emphasized benign credit costs over the past eight quarters, thus aiding the lender to invest in its digital capabilities and capacity building.
However, they highlighted that deposit mobilization would be a key challenge going ahead. "The focus for the bank amid tight liquidity environment is to balance growth and profitability. We expect Axis Bank deposits and loans to register 15.5 percent and 15 percent CAGR over FY24-26F," they added.
0 Comment