Hot Chips - Axis Bank
Ali On Content / 10 May 2010
The scrips in this column have been recommended with a short-term investment horizon and carry high risk. So, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.
Axis Bank
BSE Code: 532215
Volume: 226308
CMP: 1241.55
Axis Bank, in the recently concluded quarter, posted better results and it is above the street estimates. From July 1, 2010 onwards the RBI is coming up with the ‘Base Rate’. The actual lending rate charged would be base rate plus borrower-specific charges including operating costs. Presently, lending by banks is done on either above PLR or on sub PLR. But once the base rate comes, banks would have to lend at around 3-4 per cent lower than PLR. This would impact all banks, but banks with larger CASA are going to emerge as winner. Axis Bank with its CASA ratio of around 46 per cent is likely to benefit going forward. Recently, the bank has formed an alliance with Max New York Life, which will act as a source to increase its non-interest income part. Therefore, the stock can be looked upon with a medium-to-long term perspective.
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