Buy This 3rd Largest Private Sector Banking Stock, Shares Likely To Surge 18%, Says ICICI Direct

Axis Bank is the third largest private sector bank in India with a balance sheet size of Rs 11.8 lakh crore as on September 2022. The bank has a large footprint across India with 4760 branches. Bank's Retail and SME comprise ~69% of the total loan.

ICICI Direct has a buy on Axis Bank Ltd in its recent report published on November 11, 2022. The brokerage sees 18% upside in its share price from the current level with the Rs 1,000 target price. It is a large-cap banking stock with a market cap of Rs 2,61,286 crore.

Stock Outlook & Returns Over The Years

On the NSE, the stock's current market price (CMP) is Rs. 850.70 per share, 0.83% up as compared to the previous close at Rs 843.70 per share. The stock recorded its fresh 52-week high on October 27, 2022, at Rs 919.95. Its 52-week low was recorded on June 23, 2022, at Rs 618.25.

The stock in the past 1 week has given 2% negative returns. It has given 8.29% and 12.1% positive returns on investments in the past 1 and 3 months, respectively. It gave 15.26% maximum returns in the past 1 year. In the past 3 years, the stock surged by 15.95% and in the past 5 years, the stock surged by 56.15%. 

Event- SUUTI to sell 1.55% stake in Axis Bank - Retail OFS today

The Specified Undertaking of Unit Trust of India (SUUTI) has announced sale of up to 1.55% stake or 4.65 crore shares in Axis Bank through an offer for sale (OFS). About 4.65 crore shares of Axis Bank will go on the block on November 10, 11, 2022, at a floor price of Rs 830.63 per share. Around 10% of OFS has been reserved for retail investors, who would be allowed to place their bids on November 11, 2022. SUUTI holds ~1.55% stake in the bank, suggesting it will completely exit the bank post the aforesaid OFS.

Key triggers for future price performance

• Focus on risk adjusted business & unsecured segment to aid growth. Expect advances to grow at healthy pace of 16.6% CAGR in FYFY22-24E.
• Improvement in business mix & faster asset repricing to aid yields. However, acceleration in deposit mobilisation to keep margins at current level.
• Efforts to keep cost to asset ratio at 2-2.5% and adequate cumulative provisions of 160% of GNPA provide comfort on earnings volatility. Expect PAT to grow at 31% CAGR in FY22-24E.
• RoA at 1.8% in Q2FY23; sustenance of performance to aid re-rating.

 

Buy for a target price of Rs 1,000 per share

"We have a BUY rating on the stock with a target price of Rs 1000 per share, valued at 2.3x FY24E adjusted book value (ABV). Focus on risk adjusted business growth and improving margin trajectory is seen aiding return ratios with sustainability of performance to drive valuation ahead. Given the fundamental strength and improving return ratios trajectory, the OFS remains a good opportunity to accumulate the stock from a long-term investment perspective," the brokerage has said.

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.