Axis Bank, HUL, Indian Hotels, AU SFB, DCB Bank, Tata Elxsi, MCX Q4 Results Review: HDFC Securities

HDFC Securities Institutional Equities

Axis Bank - Deposit handicap poses growth constraint

Axis Bank Ltd. beat estimates, on account of moderate net interest margin reflation (+5 bps QoQ) and treasury gains, offset by modest growth on both sides of the balance sheet. Deposit growth (~13% YoY; +6% QoQ) benefitted from accelerated term-deposit mobilisation and enhanced current account and savings account mix at 43% (+85 bps QoQ).

As outlined in our previous update, Axis Bank has been incrementally leaning towards improving the quality of deposits in recent times (outflow run rate improved 500 bps over the past two years).

The credit/deposit ratio stayed elevated at 90.3% (9M FY24: 92.8%) despite modest sequential loan growth. We believe that Axis Bank has significant ground to cover in terms of overcoming the deposit handicap and exercising greater pricing power on the asset side compared to its peers.

We marginally tweak our FY25E/FY26E forecasts by 2-5%, driven by a marginal increase in loan growth forecasts; maintain Add with a target price of Rs 1,190 (standalone bank at 1.7 times March-26 adjusted book per share) (earlier target price Rs 1,170).

HUL - Demand recovery to be gradual

Hindustan Unilever ltd. reported 2% underlying volume growth with flat growth as pricing remained negative (passing on softening raw material benefits to consumers).

Mirroring trends of previous quarters, demand recovery remains gradual with the urban market leading growth with premium portfolio sustaining outperformance over the mass portfolio.

Given the benign input cost environment, local competitive intensity remains high. While price growth is likely to be low-single-digit negative, HUL is focused on driving competitive volume growth, led by a focus on-

1. growing the core through brand superiority;

2. market-making and premiumization;

3. reshaping portfolio in high growth spaces; and

4. leadership in channels of the future.

HUL will continue to reinvest the benefits of gross margin expansion (320 bps YoY in Q4) by stepping up brand investments and long-term strategic priorities, which may limit Ebitdam expansion in the short-medium term.

We model only a gradual recovery in demand and moderate Ebitdam expansion leading to a 3% cut in our FY25-26 EPS estimates.

We the stock at 47 times price/earning on Mar26E earnings per share to derive a target price of Rs 2,500. Maintain Reduce.

Indian Hotels - Growth expected to normalise due to a high base

Indian Hotels Company Ltd.’s Q4 FY24 financials were in line with revenue growth of 17% YoY to Rs 19.1 billion, led by an increased occupancy (75%, +400 bps YoY) and average room rate (+7% YoY), resulting in healthy RevPAR growth (+13% YoY) at domestic enterprise level.

The increase in ARR/RevPAR was driven by the prevailing favorable demand-supply gap, corporate travels and staycations. Currently, Indian Hotels has 218 operational and 92 pipeline hotels to capitalize on the industry tailwinds.

This portfolio is expected to have 72% rooms under the asset-light model. Indian Hotels launched its new brand “gateway”, specifically designed for tier-II and III cities.

Under phase 1, a total of fifteen gateway hotels will be launched by FY28 from a total pool of 100 planned hotels.

We expect RevPAR to experience a low-teens CAGR over the next two years, preceding any potential supply glut. Post robust growth in FY24, we estimate a normalized revenue growth in FY25.

We maintain our Reduce rating with an enterprise /Ebitda multiple of 24 times FY26E and revise target price to Rs 510.

AU Small Finance Bank - Merger to stretch medium-term return metrics

AU Small Finance Bank Ltd. missed estimates, even as credit costs stayed elevated (FY24: 72 bps), largely from a normalising credit card portfolio, and one-off merger-related stamp duty expenses.

Loan growth was healthy (+25% YoY) on the back of a pick-up in growth in the wheels and SBL segments. Deposit growth (+25% YoY) mirrored loan growth, with the CASA ratio improving to 33.4% (+40 bps QoQ), and the mix of CASA plus Retail TD at 64%, as incremental funding costs rose 8bps QoQ (Q3FY24: +20bps).

Margins at 5.1% declined QoQ on the back of a largely secure portfolio and a normalising unsecured book.

We adjust our FY25E/FY26E estimates to factor in the post-merger impact of higher credit costs and elevated opex, offset by higher margins and other income; maintain Reduce, with a revised target price of Rs 590 (2.3 times Mar-26 ABVPS).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.