BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Prabhudas Lilladher Report
Axis Bank Ltd.'s earnings were mixed as operating income missed estimates by 4% due to weaker margins although profit after tax was a beat at Rs 41.2 billion (our estimate: Rs 39.8 billion) driven by lower provisions (due to stronger recoveries).
Loan growth was a tad higher led by retail, however Axis Bank's management was a bit cautious on credit growth in FY23E owing to a tougher global environment.
The likelihood of reaching the guided return on equity of ~16% seems lower in the medium term as margin recovery could be protracted and opex may remain elevated. However, balance sheet strength and improving asset quality provide some cushion.
Valuation discount to ICICI Bank Ltd. might widen to 20-25% (currently 16%) unless net interest margin improves.
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