Axis Bank Moves Upwards On Strong Q3FY13 Numbers

DSIJ Intelligence / 15 Jan 2013

In its Dec 2012 quarter report card, Axis Bank has notched up higher NIIs and net profits, healthy business growth and lower Net NPAs on a yearly basis.
Axis Bank is the latest in line to announce a good set of Q3FY13 numbers. For the Dec quarter, its Net Interest Income (NII) increased by 17% to Rs 2495 crore, while the Net Profit grew by 22% to Rs 1347 crore on a YoY basis. As per media reports, the street was expecting to see NII and Net Profit growth of 14% and 17% respectively. This helped the counter to gain in trades, closing the day 3% higher at Rs 1426 per share.

The key financial parameters of the bank are as follows:

Particulars (%)Dec 2012Dec 2011
Net Interest Income (NII)24952140
Net Profit (Rs / Cr) 1347 1102
CASA 40 42
NIM 3.57 3.75
CAR 13.73 11.78
Provisions (Rs / Cr) 386 422
Gross NPA 1.1 1.1
Net NPA 0.33 0.39
The bank’s key financial parameters, viz. its asset quality and Net Interest Margin (NIM) also performed well. Its Gross NPAs remained unchanged on a sequential and yearly basis at 1.1% for the quarter ending Dec 2012. The Net NPAs, however, decreased by 6 basis points to 0.33% on a YoY basis, while it remained unchanged if compared on a sequential basis. Further, as of Dec 2012, the bank’s Provision Coverage Ratio (PCR) stood at 81%, which is above the RBI’s guidelines of at least 70%.

Its Net Interest Margin (NIM) decreased by 18 basis points to 3.57% YoY, but showed signs of improvement on a sequential basis, up by 11 basis points. With the interest rate expected to soften in the RBI’s forthcoming monetary policy meet, we believe that the bank’s NIM would improve going ahead. As of Dec 2012, its Capital Adequacy Ratio (CAR) stands at 13.73% against 11.78% in the similar period last year. 

Axis Bank has posted good business growth, which is evident from the fact that its advances grew by 21% to Rs 179504 crore (above the RBI’s expectations of 16% for FY13) and the deposits grew by 15% to Rs 244501 crore (in line with estimates). Retail advances, which account for 27% of the net advances, grew by 45% on a YoY basis to Rs 48068 crore. Of the total deposits, the Current Account and Savings Account (CASA) deposits grew by 13%, with the CASA ratio standing at 40%.

To take a segmental view, Retail Banking performed extremely well when compared to the bank’s Treasury and Wholesale Banking segment. Revenues from Retail grew by 34% to Rs 4684 crore on a YoY basis while the profits from the same stood at Rs 96 crore against Rs 35 crore in the similar period last year. This was seen after the bank expanded its branch and ATM network throughout the country. During Q3FY13, it added 46 branches and 66 ATMs, taking the tally to 1787 branches and 10363 ATMs.

We had recommended Axis Bank as a Muhurat Buy in our Diwali 2012 issue (DSIJ Vol 27, Issue No. 24, dated Nov 18, 2012), when it was trading at Rs 1185. At the current market price of Rs 1426 per share, it is yielding handsome returns of 20% in a period of two months. Management in the conference call said that they expect the Net Interest Margin (NIM) to remain stable going ahead. Further on the overall banking space management is of the view that one should watch atleast couple of quarters before opining that worst is over in terms of asset quality.   On the valuations front, the scrip is currently available at a Price-to-Book value of 2.25x, which we believe is still fairly priced.

We reiterate our ‘buy’ call on the counter, as the bank has healthy financial numbers and is on a robust growth trajectory.


RevenueOperating Profit
Segment (Rs / Cr)Dec 2012Dec 2011% changeDec 2012Dec 2011% change
Treasury Operations 10715 9460 13.27 319 318 0.31
Retail Banking 4684 3500 33.83 96 35 174.29
Wholesale Banking 4876 4329 12.64 1454 1207 20.46
Other Banking operations 143 98 45.92 105 76 38.16
Less Inter segment 11838 10180 16.29


Total 8580 7207 19.05 1974 1636 20.66

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