• Axis Bank stock has been an outperformer, rallying over 34% during the period this year
According to domestic brokerage and research firm Motilal Oswal, Axis Bank is focused on building a strong, consistent and sustainable franchise and since asset quality issues are now behind, slippage and credit costs should be under control.
Net Interest Margin (NIM) has improved significantly and the Bank believes that it has sufficient leverage to offset the increase in deposit cost. While the bank will continue to invest, it expects to bring down the cost-to-assets ratio to ~2% by the end of FY2015.
Loan growth is expected to remain 4-6% higher than industry growth over the medium term with an aim to reach a consolidated ROE of 18%. We estimate that AXSB will deliver an ROA/ROE of 1.8%/16.9% in FY25. Axis Bank is our top pick for Calendar Year 23 with a target price of ₹1,130 per share. Buy Hold," the note said.
Axis Bank remains focused on its well defined strategy of growth, profitability and sustainability with the objective of delivering a consolidated ROE of 18% on a sustained basis. The brokerage house believes that Axis Bank has made good progress over the past few years and strengthened its balance sheet by granulating it, increasing the mix of retail loans and improving its provision coverage ratio (PCR).
The bank achieved its consolidated ROE target of 18% in 2QFY23 and Motilal Oswal believes it remains on track to deliver a sustainable ROE of 18% in the medium term.
“Axis Bank has made good progress over the last few years strengthening its balance sheet by granulating it, increasing the mix of retail loans and improving its PCR. As a result, its key metrics such as loan growth, margins and profitability have improved," it highlighted.
The private bank's stock has been an outperformer this year, rallying over 34% in 2022 (YTD). Following the private lender's Q2 results for the quarter ending September 2022, several broking firms revised the bank's earnings estimates upwards after it exceeded expectations on key metrics such as net interest income (NII) and NIM.
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