Axis Bank Ltd - Company Profile, Performance Update- Angel Broking

Views:
 
     
 

Presentation Description

Check out Axis Bank Ltd company profile, performance update, profit & loss statement, balance sheet, consolidated cashflow statement, key ratios and other detailed information at Angel Broking. Click on the link to view full report: https://www.angelbroking.com/research/axis-bank-ltd-research-report-31-07-2019

Comments

Presentation Transcript

slide 1:

1 Please refer to important disclosures at the end of this report 1 1 Particulars ` cr Q1FY20 Q4FY19 chg qoq Q1FY19 chg yoy NII 5844 5706 2 5167 13 Pre-prov. profit 5893 5014 18 4372 35 PAT 1370 1505 9 701 95 Source: Company Angel Research For Q1FY2020 Axis Bank reported PAT of `1370cr which is lower than our estimates owing to higher provision however the positives were other income and pre-provision profit surged by 35 yoy. Bank disappointed on asset quality front due to 1 higher slippages 2 addition to BB below `2242cr 3 exposure to new 8 stressed groups revealed. Provision slippages surge New set of potential stressed asset disclosed: Provisions during the quarter increased by 41/14 qoq/yoy primarily owing to higher slippages and additional provision land held as non baking asset and non fund based outstanding in NPA/ weak asset. Key disappointment was new list of potential stressed loan in 8 stressed corporate groups. Total exposure to above corporate was `12200cr of which `7000cr was through advances `2200cr through investment in bonds and non-fund based exposure worth of `3000cr Exhibit 4. Out of this exposure worth `6700cr is not part of BB below book and NPA. However bank has taken additional contingent provision worth `2358cr over last few quarters. Overall stress asset BB Below+ SR+NFB went up by 140bps qoq to 3.94. Jump in other income contained Opex aids pre-provision profit: During the quarter other income jumped by 32 yoy led by treasury gain worth `832cr and 26 jump in core fee income supported by healthy growth 28 yoy in retail fees. Opex grew at 3 yoy aided by rationalisation of outsourced services digital initiatives and lower promotion spends. Management expects Opex to remain contained for FY2020. Retail loans drive momentum NIM improved: During Q1FY2020 the bank’s advances grew by 13 yoy led by retail up 22 yoy. However overseas book de-grew 34 yoy. NIMs improved by 11bps yoy adjusted for one-offs to 3.6. Management guided NIM for FY2020 in the range on 3.5-3.8. Deposit grew at healthy rate of 21 yoy however CASA grew 7 yoy while declined 8 sequentially. CASA ratio plunged by 555bps/304bps yoy/qoq to 41 however other banks are also witnessing decline in CASA ratio. Capital Adequacy Ratio: Bank’s total CAR stands at 16.06 of which 11.68 is CET-1 45bps of capital was infused through conversion of warrants. During the quarter 31bps CET-1 was absorbed by 2 RBI regulatory changes. Outlook Valuation: Axis Bank currently trades at 2x its FY2021E price to book value after adjusting value of subsidiaries. We expect the stock to get re-rated owing to 1 new leadership 2 limited stressed loan pool and 3 improvement in return ratios ROA/ROE – 1.22/14.2 by FY2021E. We recommend Buy on the stock with a Target Price of `850. Exhibit 1: Key Financials Y/E March ` cr FY17 FY18 FY19 FY20E FY21E NII 18093 18618 21708 24849 29274 chg 7 3 17 14 18 Net profit 3679 276 4677 8273 11940 chg 55 93 1596 77 44 NIM 3.4 3.1 3.2 3.2 3.3 EPS ` 14 1 18 32 46 P/E x 57 763 45 25 18 P/ABV x 3.9 3.7 3.3 2.8 2.4 RoA 0.6 0.0 0.6 1.0 1.2 RoE 7 0.5 7 11 14 Source: Company Valuation done on closing price of 31/7/2019 BUY CMP `674 Target Price `850 Investment Period 12 Months Stock Info Sector Bloomberg Code Shareholding Pattern Promoters 17.6 MF / Banks / Indian Fls 17.6 FII / NRIs / OCBs 52.1 Indian Public / Others 10.1 Abs. 3m 1yr 3yr Sensex 2.1 0.1 33.9 Axis Bank 9.2 23.8 22.7 Beta 1.1 Banking Market Cap ` cr 176679 52 Week High / Low 827/543 Avg. Daily Volume 271058 Face Value ` 2 BSE Sensex 37481 Nifty 11118 Reuters Code AXBK.BO AXSB IN 3-year price chart Source: Company Angel Research Jaikishan Parmar Research Analyst 022 – 39357600 Ext: 6810 Jaikishan.parmarangelbroking.com 300 400 500 600 700 800 900 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Axis Bank Strong operating performance new set of stressed loan disclosed Q1FY2020 Result Update | Banking July 31 2019

slide 2:

2 Axis Bank|Q1FY2020 Result Update July 31 2019 2 Exhibit 1: Quarterly Performance Particulars ` cr Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 chg qoq chg yoy Interest Earned 11722 11771 12777 13281 14130 14798 15255 3 19 on Advances / Bills 8768 8753 9612 9955 10628 11127 11461 3 19 on investments 2559 2574 2682 2802 2894 2971 3119 5 16 on bal with RBI others 81 108 125 162 183 224 192 14 54 on others 314 336 358 363 424 476 483 1 35 Interest Expended 6990 7041 7610 8049 8526 9092 9411 4 24 Net Interest Income 4732 4730 5167 5232 5604 5706 5844 2 13 Other Income 2593 2789 2925 2678 4001 3526 3869 10 32 Operating income 7325 7519 8092 7910 9604 9232 9712 5 20 Operating Expenses 3471 3847 3720 3816 4080 4217 3820 9 3 Employee expenses 1063 1079 1228 1175 1203 1142 1307 14 6 Other Opex 2408 2768 2492 2642 2877 3075 2513 18 1 Pre.Prov Profit 3854 3672 4372 4094 5525 5014 5893 18 35 Provisions Contingencies 2811 7180 3338 2927 3055 2711 3815 41 14 PBT 1043 3507 1034 1167 2470 2303 2078 10 101 Provision for Taxes 316 1319 333 377 789 798 708 11 112 Tax rate 30 38 32 32 32 35 0 PAT 726 2189 701 790 1681 1505 1370 9 95 Balance sheet Advance ` cr 420923 439650 441074 456121 475105 494798 497276 1 13 Deposit ` cr 408967 453623 447079 479680 514092 548471 540678 1 21 Credit-to-Deposit Ratio 103 97 99 95 92 90 92 175.9bp 668.4bp CA ` cr 70492 95650 68278 80128 84172 89265 71211 20 4 SA ` cr 131219 148202 141359 148742 151380 154129 152263 1 8 CASA deposits ` cr 201711 243852 209637 228870 235552 243394 223474 8 7 CASA 49 54 47 48 46 44 41.3 304.5bp 555.8bp CAR 18 15 15 15 15 15 16.1 149bp 71bp Tier 1 CAR 14 12 12 12 12 11 12.9 163bp 104bp Profitability Ratios Yield Advance 8.44 8.14 8.73 8.88 9.13 9.18 9.24 6.4bp 51.2bp COF REPO 5.08 5.11 5.23 5.34 5.44 5.69 5.70 1bp 47bp Reported NIM - Domestic 3.60 3.59 3.50 3.59 3.61 3.61 3.56 5bp 6bp Cost-to-income ratio 0.47 0.51 0.46 0.48 0.42 0.46 0.39 6.4bp 6.6bp Asset quality Gross NPAs ` cr 25001 34249 32662 30938 30855 29789 29405 1 10 Gross NPAs 5.28 6.77 6.52 5.96 5.75 5.26 5.25 1bp 127bp Net NPAs ` cr 11769 16592 14902 12716 12233 11276 11037 2 26 Net NPAs 2.56 3.40 3.09 2.54 2.36 2.06 2.04 2bp 105bp PCR 52 50 53 57 59 61 61 30.6bp 853.5bp Slippage ratio 1.1 3.8 1.0 0.6 0.8 0.6 1.0 35.6bp 1.8bp Credit Cost on Adv 0.7 1.6 0.8 0.6 0.6 0.5 0.8 21.9bp 1bp Source: Company

slide 3:

3 Axis Bank|Q1FY2020 Result Update July 31 2019 3 Exhibit 2: Advance led by retail segment Particular ` cr Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 chg qoq chg yoy Retail 211648 221710 232397 245812 258205 5 22 Home Loan 84659 86467 90635 93409 98118 5 16 Rural Lending 29631 28822 32536 34414 30985 10 5 Auto Loan 23281 24388 25564 27039 30985 15 33 PL 21165 24388 25564 29497 30985 5 46 LAP 16932 19954 18592 22123 20656 7 22 CC 8466 8868 11620 12291 12910 5 52 SBB 6349 6651 6972 7374 10328 40 63 Other 21165 22171 20916 19665 23238 18 10 Corporate Banking 172443 174149 180469 183402 177455 3 3 Term Loan 121948 119520 124698 121122 119379 1 2 WC 50495 54629 55771 62279 58076 7 15 SME 56983 60262 62238 65584 61616 6 8 Term Loan 12348 12496 12846 13475 12757 5 3 WC 44635 47766 49392 52109 48859 6 9 Total 441074 456121 475104 494798 497276 1 13 Source: Company Exhibit 3: GNPA Movement Slippages surged Particular ` cr Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 GNPA Opening 21280 22031 27402 25001 34249 32662 30938 30855 29790 Fresh Slippage 3519 8936 4428 16536 4337 2777 3746 3012 4798 Slippage 0.9 2.2 1.1 3.8 1.0 0.6 0.8 0.6 1.0 Slippage Annul 3.7 8.7 4.2 15.0 3.9 2.4 3.2 2.4 3.9 Upgrade Recovery 306 1048 4008 3401 2917 2186 1622 2376 2177 Write off 2462 2517 2821 3887 3007 2315 2207 1701 3005 Closing GNPA 22031 27402 25001 34249 32662 30938 30855 29790 29406 Prov 12265 13350 13232 17657 17760 18222 18622 18513 18367 NPA 9766 14052 11769 16592 14902 12716 12233 11277 11039 Provision 2342 3140 2811 7180 3338 2927 3055 2711 3815 CC 0.6 0.8 0.7 1.6 0.8 0.6 0.6 0.5 0.8 CC Ann 2.4 3.1 2.7 6.5 3.0 2.6 2.6 2.2 3.1 Source: Company Angel Research

slide 4:

4 Axis Bank|Q1FY2020 Result Update July 31 2019 4 Exhibit 4: Non-NPL stress Particular ` cr Q1FY20 BB Below rated loans as on1QFY20 7504 Non-Fund based stress pool NFB to BB Below NPLs 2500 Security Receipt 2940 Total of existing stress 1 12944 New list After removing overlap New loan addition Exposure 7000cr and 3900cr considered in NPA BB Below 3100 New Non-Fund based addition Actual 3000cr and 1000cr considered in NPA 2000 New Investment addition Exposure 2200cr and NPA/MTM taken 200cr/400cr 2000 Total of new list 2 7100 Total stress on loans 1+2 20044 Provisions on non-NPL stress 2358 Total stress loans 17686 Total stress loans 3.56 Source: Company Exhibit 5: SOTP Sum of the parts Stake in Company Valuation Methodology Value/Share ` Core Business 100.0 2.5x FY21E ABV 826.6 Axis Capital Ltd 100 15x FY21E PAT 9.8 Axis MF 75 20x FY21E PAT 3.7 Axis Fin 100 1.5x FY21E Book Value 10.5 Axis Sec 100 15x FY21E PAT 5.2 holding value post 20 disc 23.4 Sum of Parts 850 Source: Company Angel Research Valuation done on closing price of 31/7/2019

slide 5:

5 Axis Bank|Q1FY2020 Result Update July 31 2019 5 Income Statement Y/E March ` cr FY17 FY18 FY19E FY20E FY21E Net Interest Income 18093 18618 21708 24849 29274 - YoY Growth 7 3 17 14 18 Other Income 11691 10967 13130 15180 17409 - YoY Growth 25 6 20 16 15 Operating Income 29784 29585 34839 40029 46684 - YoY Growth 14 1 18 15 17 Operating Expenses 12200 13990 15833 17566 20304 - YoY Growth 21 15 13 11 16 Pre - Provision Profit 17585 15594 19005 22463 26380 - YoY Growth 9 11 22 18 17 Prov. Cont. 12117 15473 12031 9926 8289 - YoY Growth 227 28 22 17 16 Profit Before Tax 5468 122 6974 12537 18091 - YoY Growth -56 98 5637 80 44 Prov. for Taxation 1788 154 2297 4264 6151 - as a of PBT 33 - 33 34 34 PAT 3679 276 4677 8273 11940 - YoY Growth 55 93 1596 77 44 Balance Sheet Y/E March ` cr FY17 FY18 FY19E FY20E FY21E Equity 479 513 513 524 524 Reserve Surplus 55284 62932 66676 77785 89128 Net worth 55763 63445 67190 78309 89652 Deposits 414379 453623 548471 636227 750748 - Growth 16 9 21 16 18 Borrowings 105031 148016 152776 174164 198547 Other Liab. Prov. 26387 26373 28733 13379 10398 Total Liabilities 601559 691458 797169 902079 1049345 Cash Balances 30858 35481 35099 45641 46349 Bank Balances 19398 7974 32630 13119 15386 Investments 128793 153876 174969 200132 228648 Advances 373069 439650 494798 573966 677279 - Growth 10 18 13 16 18 Fixed Assets 3747 3972 4827 5599 6607 Other Assets 45693 50505 54847 63623 75075 Total Assets 601559 691458 797169 902079 1049345 - Growth 11 15 15 13 16

slide 6:

6 Axis Bank|Q1FY2020 Result Update July 31 2019 6 Key Ratio Y/E March FY17 FY18 FY19 FY20E FY21E Profitability ratios NIMs 3.43 3.13 3.16 3.16 3.25 Cost to Income Ratio 41 47 45 44 43 RoA 0.6 0.0 0.6 1.0 1.2 RoE 7 0 7 11 14 B/S ratios CASA Ratio 51.4 53.8 44.4 44.4 44.4 Credit/Deposit Ratio 90 97 90 90 90 Asset Quality Gross NPAs 5.04 6.77 5.0 4.0 3.8 Net NPAs 2.11 3.40 2.3 1.6 1.5 Credit Cost 3.2 3.5 2.4 1.7 1.2 Provision Coverage 0.58 0.50 0.54 0.60 0.61 Per Share Data ` EPS 14 1 18 32 46 ABVPS 70 cover. 204 218 241 290 333 DPS 5 5 5 5 5 Valuation Ratios PER x 48 641 38 21 15 P/ABVPS x 3.3 3.1 2.8 2.3 2.0 Dividend Yield 0.8 0.8 0.7 0.7 0.7 DuPont Analysis FY17 FY18 FY19 FY20E FY21E NII 3.2 2.9 2.9 2.9 3.0 - Prov 2.1 2.4 1.6 1.2 0.8 Adj NII 1.0 0.5 1.3 1.8 2.2 Other Income 2.0 1.7 1.8 1.8 1.8 Total Income 3.1 2.2 3.1 3.5 3.9 Opex 2.1 2.2 2.1 2.1 2.1 PBT 1.0 0.0 0.9 1.5 1.9 TAX 0.3 -0.0 0.3 0.5 0.6 RoA 0.6 0.0 0.63 0.97 1.22 Leverage 10.5 10.8 11.4 11.7 11.6 RoE 6.8 0.5 7.2 11.4 14.2 Valuation done on closing price of 31/7/2019

slide 7:

7 Axis Bank|Q1FY2020 Result Update July 31 2019 7 Disclosure of Interest Statement Axis Bank 1. Financial interest of research analyst or Angel or his Associate or his relative No 2. Ownership of 1 or more of the stock by research analyst or Angel or associates or relatives No 3. Served as an officer director or employee of the company covered under Research No 4. Broking relationship with company covered under Research No Ratings Based on expected returns Buy 15 Accumulate 5 to 15 Neutral -5 to 5 over 12 months investment period: Reduce -5 to -15 Sell -15 Research Team Tel: 022 - 39357800 E-mail: researchangelbroking.com Website: www.angelbroking.com Angel Broking Limited hereinafter referred to as “Angel” is a registered Member of National Stock Exchange of India Limited Bombay Stock Exchange Limited Metropolitan Stock Exchange Limited Multi Commodity Exchange of India Ltd and National Commodity Derivatives Exchange Ltd It is also registered as a Depository Participant with CDSL and Portfolio Manager and Investment Adviser with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a registered entity with SEBI for Research Analyst in terms of SEBI Research Analyst Regulations 2014 vide registration number INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities Market. Ang el or its associates/analyst has not received any compensation / managed or co-managed public offering of securities of the company covered by Analyst during the past twelve months. This document is solely for the personal information of the recipient and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document sho uld make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document including the merits and risks involved and should consult their own advisors to de termine the merits and risks of such an investment. Reports based on technical and derivative analysis center on studying charts of a stocks price movement outstanding positions and trading volume as opposed to focusing on a companys fundamentals and as such may not match with a report on a companys fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the contrary view if any The information in this document has been printed on the basis of publicly available information internal data and ot her reliable sources believed to be true but we do not represent that it is accurate or complete and it should not be relied on as such as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in th is report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly we cannot testify nor make any representation or warranty express or implied to the accuracy contents or data contained within this document . While Angel Broking Limited endeavors to update on a reasonable basis the information discussed in this material there may be regulatory compliance or other reasons that prevent us from doing so. This document is being supplied to you solely for your information and its contents information or data may not be reproduced redistributed or passed on directly or indirectly. Neither Angel Broking Limited nor its directors employees or affiliates shall be liable for any loss or damage that may ari se from or in connection with the use of this information.

authorStream Live Help