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Axis Bank-RU4QFY2011-230411

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					                                                                                               4QFY2011 Result Update | Banking

                                                                                                                         April 23, 2011



    Axis Bank                                                                                BUY
                                                                                             CMP                                `1,450
    Performance Highlights                                                                   Target Price                       `1,768
 
Particulars (` cr)     4QFY11      3QFY11        % chg (qoq)       4QFY10     % chg (yoy)    Investment Period             12 Months
NII                       1,701       1,733              (1.9)      1,460           16.5
                                                                                             Stock Info
Pre-prov. profit          1,821       1,658                  9.8    1,384           31.6
                          1,020         891              14.4         765           33.4     Sector                              Banking
PAT
Source: Company, Angel Research                                                              Market Cap (` cr)                   59,510
                                                                                             Beta                                    1.0
For 4QFY2011, Axis Bank registered healthy 33.4% yoy growth in its net profit, in
line with our estimates. However, NII was lower than estimated due to a sharp                52 Week High / Low            1,608/1,147

37bp qoq decline in reported NIM, which was offset by stronger other income led              Avg. Daily Volume                  1,91,966
primarily by fee income. Strong yoy growth ahead of peers in balance sheet, fee              Face Value (`)                          10
income and branch network was the key positive from the results.                             BSE Sensex                          19,602
We maintain our Buy recommendation on the stock.                                             Nifty                                5,885
                                                                                             Reuters Code                       AXBK.BO
NIM disappoints but other operating parameters in fine fettle: During 4QFY2011,
apart from NIM, the bank’s performance on other operating parameters was                     Bloomberg Code                     AXSB@IN

strong as evident from strong fee income growth (39% adjusted yoy),
stable cost-to-income ratio at 42.2%, slippages rate contained within 1.0% and
                                                                                             Shareholding Pattern (%)
gross NPAs brought down to 1.01% with a strong 80.9% provision coverage ratio
                                                                                             Promoters                              37.2
(including technical write-offs). Advances increased by robust 15.3% qoq and
                                                                                             MF / Banks / Indian Fls                 5.1
36.5% yoy and deposits grew by 21.5% qoq and 33.9% yoy. Sequential growth in
advances was driven by agri, corporate and SME loans. The daily average                      FII / NRIs / OCBs                      47.1

balance of CASA deposits grew by 22.7% yoy. CASA ratio declined to 41.1% in                  Indian Public / Others                 10.6
4QFY2011 from 42.3% in 3QFY2011. Reported NIM compressed by 37bp qoq
to 3.44% because of a ~400bp qoq decline in average CASA ratio, a ~120bp
                                                                                             Abs. (%)              3m      1yr       3yr
increase in cost of term deposits and lag in repricing of loans and lower CD ratio.
Sequential NIM compression of 37bp was unusually high during 4QFY2011, as                    Sensex                3.3   12.2       17.1
the bank had to fulfill its priority sector lending obligations through term deposits        Axis Bank           13.2    17.0       64.5
(in a sharp rise in term deposits rates scenario).

Outlook and valuation: The stock is currently trading at valuations of 2.3x
FY2013E ABV. We remain positive on the bank, owing to its attractive CASA
franchise, rapid branch expansion, multiple sources of sustainable fee income,
strong growth outlook and A-list management. We maintain our Buy
recommendation on the stock with a target price of `1,768.
Key financials
Y/E March (` cr)                   FY2010         FY2011           FY2012E      FY2013E
NII                                  5,004          6,563            7,909         9,785    Vaibhav Agrawal
% chg                                 35.8           31.1              20.5          23.7   022 – 3935 7800 Ext: 6808
Net profit                           2,515          3,388            4,303         5,467    vaibhav.agrawal@angelbroking.com
% chg                                 38.5           34.8              27.0          27.0
NIM (%)                                3.1             3.2              3.0           3.0   Shrinivas Bhutda
                                                                                            022 – 3935 7800 Ext: 6845
EPS (`)                               62.1           82.5            101.4         128.8
                                                                                            shrinivas.bhutda@angelbroking.com
P/E (x)                               23.4           17.6             14.3          11.3
P/ABV (x)                              3.7             3.1              2.7           2.3
                                                                                            Varun Varma
RoA (%)                                1.5             1.6              1.6           1.6
                                                                                            022 – 3935 7800 Ext: 6847
RoE (%)                               19.2           19.3             20.7          22.1
                                                                                            varun.varma@angelbroking.com
Source: Company, Angel Research

Please refer to important disclosures at the end of this report                                                                       1
                                                            Axis Bank | 4QFY2011 Result Update



                 Exhibit 1: 4QFY2011 performance
                 Particulars (` cr)                4QFY11 3QFY11 % chg (qoq) 4QFY10 % chg (yoy)
                 Interest earned                    4,367      3,838       13.8       2,988      46.1
                 - on Advances / Bills              3,063      2,601       17.8       2,075      47.6
                 - on investments                   1,213      1,167        4.0        856       41.7
                 - on balance with RBI & others        64            48    32.0         27     133.8
                 - on others                           27            23    20.3         30       (9.6)
                 Interest Expended                  2,666      2,105       26.6       1,528      74.4
                 Net Interest Income                1,701      1,733       (1.9)      1,460      16.5
                 Other income                       1,450      1,148       26.4        934       55.4
                 Other income excl. treasury        1,392      1,013       37.5        831       67.6
                 - Fee Income                       1,231        968       27.2        780       57.9
                 - Treasury Income                     58        135      (56.9)       103     (43.5)
                 - Others                             161            45   256.0         51     215.1
                 Operating income                   3,151      2,881        9.4       2,394      31.7
                 Operating expenses                 1,331      1,222        8.9       1,010      31.8
                 - Employee expenses                  396        396       (0.0)       334       18.7
                 - Other Opex                         935        826       13.1        676       38.2
                 Pre-provision Profit               1,821      1,658        9.8       1,384      31.6
                 Provisions & Contingencies           254        314      (19.0)       202       26.0
                 - Provisions for NPAs                 97        233      (58.4)       176     (44.9)
                 - Other Provisions                   157            81    94.6         26     508.4
                 PBT                                1,566      1,345       16.5       1,182      32.5
                 Provision for Tax                    546        453       20.5        417       31.0
                 PAT                                1,020        891       14.4        765       33.4
                 Source: Company, Angel Research


                 Exhibit 2: 4QFY2011 – Actual vs. Angel estimates
                 Particulars (` cr)                         Actual        Estimates           Var. (%)
                 Net interest income                        1,701            1,803               (5.7)
                 Other income                               1,450            1,219               19.0
                 Operating income                           3,151            3,022                4.3
                 Operating expenses                         1,331            1,245                6.9
                 Pre-prov. profit                           1,821            1,777                2.5
                 Provisions & cont.                           254              250                1.6
                 PBT                                        1,566            1,527                2.6
                 Prov. for taxes                              546              532                2.7
                 PAT                                        1,020              995                2.5
                 Source: Company, Angel Research




April 23, 2011                                                                                       2
                                                              Axis Bank | 4QFY2011 Result Update



                 Exhibit 3: 4QFY2011 performance analysis
                 Particulars                        4QFY11 3QFY11 % chg (qoq) 4QFY10 % chg (yoy)
                 Balance sheet
                 Advances (` cr)                    142,408 123,547        15.3 104,343      36.5
                 Deposits (` cr)                    189,238 155,811        21.5 141,300      33.9
                 Credit-to-Deposit Ratio (%)           75.3      79.3   (404)bp     73.8    141bp
                 Current deposits (` cr)             36,917    26,799      37.8   32,168     14.8
                 Saving deposits (` cr)              40,850    39,132       4.4   33,862     20.6
                 CASA deposits (` cr)                77,767    65,931      18.0   66,030     17.8
                 CASA ratio (%)                        41.1      42.3   (122)bp     46.7   (564)bp
                 CAR (%)                               12.7      12.5     19bp      15.8   (315)bp
                 Tier 1 CAR (%)                         9.4       8.9     55bp      11.2   (177)bp
                 Profitability Ratios (%)
                 Cost of funds                          5.6       4.8     77bp       4.5    102bp
                 Reported NIM                           3.4       3.8    (37)bp      4.1    (65)bp
                 Cost-to-income ratio                  42.2      42.4    (21)bp     42.2      3bp
                 Asset quality
                 Gross NPAs (` cr)                    1,599     1,483       7.9    1,318     21.3
                 Gross NPAs (%)                         1.0       1.1     (8)bp      1.1    (12)bp
                 Net NPAs (` cr)                       410       386        6.4     419      (2.1)
                 Net NPAs (%)                           0.3       0.3     (3)bp      0.4    (10)bp
                 Provision Coverage Ratio (%)          80.9      82.7   (179)bp     72.4    852bp
                 Slippage ratio (%)                     1.0       1.3    (33)bp      NA        NA
                 NPA provision to avg. assets (%)       0.2       0.5    (29)bp      0.4    (25)bp
                 Source: Company, Angel Research




April 23, 2011                                                                                   3
                                                                                               Axis Bank | 4QFY2011 Result Update



                                                   Advances and deposits witness strong traction

                                                   During 4QFY2011, the bank’s advances registered strong growth of 15.3% qoq
                                                   and 36.5% yoy, primarily led by growth in agricultural loans (for fulfilling the
                                                   priority sector lending obligations) and the corporate and SME segments. On a
                                                   qoq basis, agricultural loans accounted for 34.7% of incremental advances, while
                                                   the corporate and SME segments contributed 28.7% and 23.1%, respectively. On a
                                                   yoy basis, corporate loans accounted for 61.5% of incremental loans (compared to
                                                   50.3% share in total advances as of FY2010) and retail loans contributed 18.2%.
                                                   Share of SME loans declined sharply on a yoy incremental basis to 5.1% compared
                                                   to share of 18.7% as of FY2010.

                                                   Exhibit 4: Strong sequential growth in agri and SME advances
                                                    Particulars (` cr)   4QFY11    3QFY11     % chg (qoq)     4QFY10    % chg (yoy)      % to total
                                                    Corporate             75,923     70,518             7.7    52,503           44.6            53.3
                                                    SME                   21,406     17,053          25.5      19,483            9.9            15.0
                                                    Agri                  17,320     10,772          60.8      11,534           50.2            12.2
                                                    Retail                27,759     25,204          10.1      20,823           33.3            19.5
                                                    - Housing             18,599     18,399             1.1    14,784           25.8            13.1
                                                    - Auto                 3,053      3,277         (6.8)       3,123           (2.2)            2.1
                                                    - Others               6,107      3,529          73.1       2,915        109.5               4.3
                                                    Total advances       142,408   123,547           15.3     104,343           36.5        100.0
                                                   Source: Company, Angel Research


                                                   Deposits also grew at a fast pace by 21.5% qoq and 33.9% yoy during the quarter.
                                                   However, growth was driven by term deposits, up 24% qoq and accounting for
                                                   close to 65% of incremental deposit accretion for 4QFY2011. Sequentially, saving
                                                   account deposits growth was muted at 4.4%, while current account deposits
                                                   increased by 37.8%. Overall, pace of CASA deposits growth moderated to 17.8%
                                                   yoy; however, on a daily average basis, CASA deposits grew by 22.7% during the
                                                   quarter. CASA ratio on a daily average basis declined by ~400bp to 37%, while
                                                   period-end CASA ratio declined by 120bp qoq to 41.1%.


Exhibit 5: CASA growth moderates                                         Exhibit 6: CASA ratio declines
            Reported yoy growth in average CASA balances (%)               (%)
 50.0                                                                      48.0       46.7
             40.6
                        38.5
 40.0                               35.5        36.3                       46.0
                                                                           44.0
 30.0                                                                                                                    42.3
                                                               22.7                                            41.5
                                                                           42.0                                                          41.1
 20.0                                                                                            40.2
                                                                           40.0
 10.0                                                                      38.0
    -                                                                      36.0
           4QFY10     1QFY11      2QFY11      3QFY11         4QFY11                  4QFY10    1QFY11         2QFY11    3QFY11          4QFY11

Source: Company, Angel Research                                          Source: Company, Angel Research




April 23, 2011                                                                                                                                     4
                                                                                        Axis Bank | 4QFY2011 Result Update



                                               NIM disappoints due to spike in cost of funds

                                               During the quarter, the credit-to-deposit ratio declined by 404bp qoq to 75.3% on
                                               account of stronger deposits mobilisation compared to credit offtake. The ~400bp
                                               decline in CASA ratio on a daily average basis coupled with rising term deposit
                                               rates (cost of term deposits up by 121bp qoq) led to the bank’s cost of funds rising
                                               by 77bp qoq to 5.56%. The bank had hiked its lending rates by 50bp in
                                               mid-January and by 25bp in mid-February to counter the increase in cost of funds,
                                               but this could not offset the cost-of-funds pressures due to lower increase and lag
                                               in repricing. Consequently, reported NIM declined by 37bp qoq to 3.44% from
                                               3.81% in 3QFY2011, higher than management’s guidance of 15–20bp during
                                               3QFY2011. The decline in NIM led to the first sequential decline in NII (1.9%) in
                                               the last nine quarters. For FY2011 as a whole, NII growth was healthy at over
                                               31.1%.

                                               Going forward, management expects NIM to stabilise at 3.25–3.50%. We have
                                               built in a 20bp decline in NIM over FY2011–13.


Exhibit 7: Sharp spike in cost of funds...                       Exhibit 8: ...leads to NIM compression
 (%)                                                               (%)
 5.8                                                               4.2      4.09
                                                      5.56
 5.5                                                               4.0
                                                                                                              3.81
 5.2                                                               3.8                  3.71         3.68
 4.9                               4.75     4.79                   3.6
                      4.61                                                                                                3.44
          4.54
 4.6                                                               3.4

 4.3                                                               3.2

 4.0                                                               3.0
        4QFY10      1QFY11        2QFY11   3QFY11   4QFY11                4QFY10      1QFY11        2QFY11   3QFY11     4QFY11

Source: Company, Angel Research                                   Source: Company, Angel Research


                                               Strong non-interest income growth

                                               Non-interest income excluding trading profit registered strong growth of 37.5%
                                               qoq and 67.6% yoy to `1,392cr, primarily on the back of fee income rising by
                                               27.2% qoq and 57.9% yoy. Fee income adjusting for the accounting policy change
                                               for recognising BG commission rose by 39% yoy. Fee income from large and
                                               mid-corporate credit group, treasury and retail business witnessed strong traction
                                               with yoy growth of 68%, 78% and 45%, respectively.

                                               Growth in other income was partly aided by the 215.2% yoy spurt in miscellaneous
                                               income (primarily recoveries from written-off accounts). Recoveries from written-off
                                               accounts contributed `155cr during 4QFY2011 and `325cr during FY2011 to
                                               other income. The bank generated `58cr of trading profit during 4QFY2011,
                                               registering a decline of 56.9% qoq and 43.5% yoy.




April 23, 2011                                                                                                                   5
                                                                                                    Axis Bank | 4QFY2011 Result Update



                                                     Exhibit 9: Break-up of non-interest income
                                                     Particulars (` cr)                4QFY11       3QFY11      % chg (qoq)     4QFY10     % chg (yoy)
                                                     Fee Income                          1,231           968           27.2        780           57.9
                                                       Corporate                            352          298           18.1        260           35.4
                                                       Treasury                             162          165           (1.8)       143           13.3
                                                       Agri & SME                            58           48           20.8         69          (15.9)
                                                       Business banking                      95           92             3.3        89            6.7
                                                       Capital markets                       15           16           (6.3)          3         400.0
                                                       Retail                               285          230           23.9        215           32.6
                                                     Trading profit                          58          135          (56.9)       103          (43.5)
                                                     Others                                 161           45          256.0         51          215.2
                                                     Other income                        1,450       1,148             26.4        934           55.4
                                                     Other income excl. Treasury         1,392       1,013             37.5        831           67.6
                                                     Source: Company, Angel Research


                                                     Asset quality improves further

                                                     Gross slippages during the quarter came down to `248cr compared to `334cr in
                                                     3QFY2011 and `446cr in 2QFY2011, indicating an annualised slippage ratio of
                                                     1.0% and much lower than the slippage ratio of 9MFY2011 (1.5%) and FY2010
                                                     (2.2%). Gross NPAs increased by 7.9% sequentially to `1,599cr, on account of
                                                     lower write-offs during the quarter. Net NPAs also increased by 6.4% on a
                                                     sequential basis to `410cr. NPA provisions fell to `97cr (0.2% of average assets)
                                                     from an average of `286cr (0.6% of average assets) each quarter during
                                                     9MFY2011. The bank’s provision coverage ratio including technical write-offs
                                                     continued to be strong at 80.9%. Gross and net NPA ratios improved to 1.0% and
                                                     0.3%, respectively.

                                                     The bank restructured loans aggregating to `108cr during 4QFY2011
                                                     (cumulatively `361cr in FY2011). Cumulative restructured assets decreased to
                                                     `1,930cr from `2,117cr in 3QFY2011. Out of the cumulative restructured book,
                                                     large and mid-corporate credit group accounted for ~75% and the SME segment
                                                     contributed 15%, while the balance was restructured in agriculture and capital
                                                     markets. A sector-wise analysis by the bank indicates that restructuring of textiles
                                                     and shipping was the highest at 23% each, followed by iron and steel at 7%.


Exhibit 10: Slippages come off sharply                                    Exhibit 11: Stable NPAs with healthy coverage
                             Slippage ratio                                        Gross NPAs (%)         Net NPAs (%)          NPA coverage (%, RHS)

 2.00                                                                      1.3                                                                 90.0
                            1.71                                                                                         82.7
              1.61                                                                                             80.2                 80.9
                                                                           1.0                    76.6
 1.50                                                                                                                                          80.0
                                              1.28
                                                                           0.8       68.2
                                                           0.95
 1.00                                                                                                                                          70.0
                                                                           0.5
 0.50                                                                                                                                          60.0
                                                                           0.3
                                                                                     1.1
                                                                                     0.4


                                                                                                  1.1
                                                                                                  0.4


                                                                                                               1.1
                                                                                                               0.3


                                                                                                                         1.1
                                                                                                                         0.3


                                                                                                                                    1.0
                                                                                                                                    0.3




    -                                                                      0.0                                                                 50.0
            1QFY11        2QFY11         3QFY11          4QFY11                    4QFY10    1QFY11       2QFY11       3QFY11     4QFY11

Source: Company, Angel Research                                           Source: Company, Angel Research; Note: PCR including tech. write-offs




April 23, 2011                                                                                                                                        6
                                                                                                           Axis Bank | 4QFY2011 Result Update



                                                             Operating expenses rise

                                                             During the quarter, operating expenses increased by 31.8% yoy, driven by a
                                                             38.2% increase in other operating costs and 18.7% rise in staff expenses. The cost-
                                                             to-income ratio for 4QFY2011 was stable at 42.2%.

                                                             During 4QFY2011, the bank added 270 branches (taking the number of branches
                                                             opened in FY2011 to 407) and 967 ATMs, taking its network size to 1,390
                                                             branches and 6,270 ATMs. Branch expansion was substantial with growth of
                                                             41.4% in FY2011. The bank plans to add ~250 branches in FY2012.

Exhibit 12: Network expansion at a decent pace                                       Exhibit 13: Stable cost-to-income ratio
                             Branches            ATMs (RHS)                                   Other opex (` cr)        Staff costs (` cr)         CIR (%, RHS)
                                                         6,270
  1,600                                                                  6,500                                         43.9
                                                                                       1,400       42.2     42.3                 42.4       42.2        45.0
  1,400                                          5,303                                 1,200




                                                                                                                                            396
                                                                         5,500




                                                                                                                                  396
                                      4,846                                                                                                             40.0




                                                                                                                        405
  1,200                                                                                1,000




                                                                                                    334
                          4,474




                                                                                                             416
               4,293                                                                    800
  1,000                                                                  4,500                                                                          35.0
                                                                                        600
    800
                                                                         3,500          400
                                        1,051



                                                   1,120



                                                              1,390




                                                                                                                                                        30.0
                 983



                            998




                                                                                                    676



                                                                                                             648



                                                                                                                        757



                                                                                                                                  826



                                                                                                                                            935
    600                                                                                 200
    400                                                                  2,500            -                                                             25.0
             4QFY10 1QFY11 2QFY11 3QFY11 4QFY11                                                  4QFY10 1QFY11 2QFY11 3QFY11 4QFY11

Source: Company, Angel Research; Note: Branches till 2QFY11 incl. service branches   Source: Company, Angel Research


                                                             Healthy capital adequacy

                                                             The bank has a healthy capital adequacy ratio of 12.7%, with tier-I capital of 9.4%
                                                             at the end of FY2011. The bank is not looking at any immediate tier-I
                                                             capital-raising plans, as it has got significant headroom for raising tier-II capital.




April 23, 2011                                                                                                                                                 7
                                                        Axis Bank | 4QFY2011 Result Update



                 Investment arguments
                 Equity capital increased to support faster market share gains

                 We believe Axis Bank’s strong capital adequacy positions it for market share gains
                 as GDP and capital market activity continue to revive, with at least 500bp higher
                 growth than industry over FY2010–12. The bank has expanded its network at a
                 33.6% CAGR since FY2003–11, driving a four-fold increase in its CASA market
                 share to 4.0% by FY2010 (a 20bp yoy increase in FY2010). In our view, such gains
                 (30–50bp every year) will continue going forward as well, especially as network
                 expansion (250+ additions, about 20–25% yoy) remains strong.

                 Fee income continues to drive higher RoEs

                 Fee income contribution across a spectrum of services has been a meaningful
                 1.9% of assets (almost twice the level in PSBs) over FY2009–11. Further, with
                 corporate loan growth picking up and capital markets reviving, fee income growth
                 is expected to continue the momentum witnessed in FY2011 (we have built in a
                 30.6% CAGR over FY2011–13), taking the contribution to 2% of assets each for
                 FY2012 and FY2013.

                 NPA concerns receding

                 With an improving economic outlook and reducing corporate leverage, NPA
                 concerns for the bank have been receding. Slippage rate for FY2011 has come
                 down to 1.4% compared to 2.2% witnessed in FY2010. Slippage rate for
                 4QFY2011 was contained within 1.0%. Loan loss provisions to average assets
                 dipped to 0.5% during FY2011 from 0.5% in FY2010; we expect further
                 improvement to 0.3% during FY2012 and FY2013.

                 Outlook and valuation
                 Our target P/ABV multiple of 2.8x on FY2013 estimates is at a ~20% discount to
                 our target P/ABV multiple of 3.6x for HDFC Bank, keeping in mind the relatively
                 higher credit and market risks. At present, Axis Bank is trading at ~30% discount
                 to HDFC Bank. However, in our view, as Axis Bank establishes a longer and more
                 credible track record of pricing and managing risks going ahead, this gap vis-à-vis
                 HDFC Bank could narrow down.

                 The stock is currently trading at attractive valuations of 2.3x FY2013E ABV.
                 We remain positive on the bank, owing to its attractive CASA franchise, multiple
                 sources of sustainable fee income, strong growth outlook and A-list management.
                 We maintain our Buy recommendation on the stock with a target price of `1,768.




April 23, 2011                                                                                    8
                                                                 Axis Bank | 4QFY2011 Result Update



                 Exhibit 14: Key assumptions
                                                                      Earlier estimates        Revised estimates
                 Particulars (%)
                                                                    FY2012        FY2013      FY2012       FY2013
                 Credit growth                                         25.0           25.0       25.0            25.0
                 Deposit growth                                        25.0           25.0       25.0            25.0
                 CASA ratio                                            47.6           46.8       40.3            39.6
                 NIMs                                                   3.4            3.4         3.0            3.0
                 Other income growth                                   23.6           25.7       25.3            26.8
                 Growth in staff expenses                              26.3           26.3       26.3            26.3
                 Growth in other expenses                              26.6           26.3       26.6            26.3
                 Slippages                                              1.2            1.2         1.0            1.0
                 Treasury gain/(loss) (% of investments)                0.4            0.3         0.4            0.3
                 Source: Angel Research


                 Exhibit 15: Change in estimates
                                                        FY2012                               FY2013
                 Particulars (` cr)          Earlier       Revised                Earlier       Revised
                                                                   Var. (%)                             Var. (%)
                                          estimates      estimates             estimates      estimates
                 NII                         8,191          7,909     (3.4)      10,175         9,785         (3.8)
                 Non-interest income         5,439          5,805       6.7       6,835         7,362            7.7
                 Operating income           13,631         13,714       0.6      17,009        17,147            0.8
                 Operating expenses          5,938          6,046       1.8       7,499         7,636            1.8
                 Pre-prov. profit            7,693          7,668     (0.3)       9,511         9,511            0.0
                 Provisions & cont.          1,160          1,175       1.4       1,403         1,419            1.1
                 PBT                         6,533          6,493     (0.6)       8,107         8,092         (0.2)
                 Prov. for taxes             2,203          2,189     (0.6)       2,630         2,626         (0.2)
                 PAT                         4,330          4,303     (0.6)       5,477         5,467         (0.2)
                 Source: Angel Research


                 Exhibit 16: Angel EPS forecast vs. consensus
                 Year (`)              Angel forecast               Bloomberg consensus                  Var. (%)
                 FY2012E                    101.4                             99.0                         2.4
                 FY2013E                    128.8                             120.0                        7.4
                 Source: Bloomberg, Angel Research




April 23, 2011                                                                                                      9
                                                                                                                            Axis Bank | 4QFY2011 Result Update



                                                       Exhibit 17: P/ABV band

                                                                         Price (`)                0.6x                    1.5x                2.4x                3.3x                4.2x

                                                         3,000

                                                         2,500

                                                         2,000

                                                         1,500

                                                         1,000

                                                           500

                                                                0




                                                                                                                                                                  Dec-09
                                                                    Apr-02




                                                                                               Jul-04




                                                                                                                                     Aug-07
                                                                                      Oct-03




                                                                                                                                                         Mar-09




                                                                                                                                                                                             Mar-12
                                                                                                                 Feb-06




                                                                                                                                                                           Sep-10
                                                                                                                            Nov-06
                                                                                                        May-05




                                                                                                                                               May-08




                                                                                                                                                                                    Jun-11
                                                                             Jan-03



                                                        Source: Company, Angel Research




Exhibit 18: Recommendation summary
                                 CMP          Tgt.    Upside        FY2013E                   FY2013E            FY2013E                    FY11E-13E               FY2013E            FY2013E
Company       Reco.
                                  (`)     price (`)      (%)        P/ABV (x)            Tgt. P/ABV (x)            P/E (x)               EPS CAGR (%)                RoA (%)            RoE (%)
AxisBk        Buy               1,450       1,768       22.0                 2.3                        2.8                11.3                         24.9                1.6              22.1
FedBk         Neutral             441             -         -                1.2                            -               8.5                         23.6                1.4              14.5
HDFCBk        Accumulate        2,404       2,671       11.1                 3.2                        3.6                16.6                         30.9                1.7              21.1
ICICIBk*      Buy               1,117       1,405       25.7                 2.1                        2.6                15.7                         25.5                1.5              16.2
SIB           Neutral              23             -         -                1.3                            -               8.5                          3.6                0.8              15.0
YesBk         Accumulate          317         355       11.8                 2.1                        2.3                11.4                         15.1                1.2              19.5
BOI           Accumulate          479         541       12.9                 1.2                        1.4                 6.4                         19.6                1.0              20.1
CorpBk        Accumulate          617         704       14.2                 1.0                        1.1                 5.5                          6.5                1.1              18.5
DenaBk        Accumulate          110         120        9.5                 0.8                        0.9                 5.2                         (0.8)               0.8              16.2
IDBI          Neutral             150             -         -                1.3                            -               7.0                         13.4                0.7              14.3
IndBk         Accumulate          239         269       12.4                 0.9                        1.1                 5.2                          7.6                1.4              19.8
IOB           Accumulate          154         172       11.8                 0.9                        1.1                 5.8                         25.2                0.8              16.7
J&KBk         Accumulate          819         930       13.6                 0.9                        1.0                 5.8                          5.5                1.2              16.1
OBC           Buy                 364         433       19.1                 0.8                        1.0                 5.4                          4.5                1.0              15.6
PNB           Buy               1,203       1,388       15.4                 1.3                        1.6                 6.6                         15.0                1.2              22.3
SBI*          Buy               2,860       3,479       21.6                 1.8                        2.2                 9.4                         30.2                1.2              21.9
UcoBk         Neutral             119             -         -                1.1                            -               6.4                          9.0                0.7              20.6
UnionBk       Buy                 333         402       20.7                 1.2                        1.4                 5.9                         16.6                1.0              20.7
Source: Angel Research; Note: *Target multiples=SOTP target price/ABV (including subsidiaries)




April 23, 2011                                                                                                                                                                                 10
                                                                 Axis Bank | 4QFY2011 Result Update



                 Income statement
                 Y/E March (` cr)                  FY07    FY08        FY09     FY10      FY11    FY12E    FY13E
                 Net Interest Income               1,567   2,585      3,686    5,004     6,563    7,909     9,785
                 - YoY Growth (%)                   45.3      65.0     42.6      35.8     31.1     20.5      23.7
                 Other Income                      1,010   1,795      2,834    3,771     4,632    5,805     7,362
                 - YoY Growth (%)                   38.4      77.7     57.8      33.1     22.8     25.3      26.8
                 Operating Income                  2,577   4,381      6,520    8,776    11,195   13,714    17,147
                 - YoY Growth (%)                   42.6      70.0     48.8      34.6     27.6     22.5      25.0
                 Operating Expenses                1,215   2,155      2,858    3,710     4,779    6,046     7,636
                 - YoY Growth (%)                   49.2      77.4     32.6      29.8     28.8     26.5      26.3
                 Pre - Provision Profit            1,363   2,226      3,662    5,066     6,416    7,668     9,511
                 - YoY Growth (%)                   37.1      63.4     64.5      38.3     26.6     19.5      24.0
                 Prov. & Cont.                      366       579       877    1,215     1,280    1,175     1,419
                 - YoY Growth (%)                   39.6      58.2     51.3      38.6      5.4     (8.2)     20.7
                 Profit Before Tax                  996    1,646      2,785    3,851     5,136    6,493     8,092
                 - YoY Growth (%)                   36.2      65.3     69.2      38.3     33.3     26.4      24.6
                 Prov. for Taxation                 337       575       970    1,337     1,747    2,189     2,626
                 - as a % of PBT                    33.8      35.0     34.8      34.7     34.0     33.7      32.4
                 PAT                                659    1,071      1,815    2,515     3,388    4,303     5,467
                 - YoY Growth (%)                   35.9      62.5     69.5      38.5     34.8     27.0      27.0



                 Balance sheet
                 Y/E March (` cr)          FY07       FY08           FY09      FY10      FY11    FY12E     FY13E
                 Share Capital              282        358           359        405       411      424       424
                 Reserve & Surplus         3,112      8,411      9,855        15,639    18,588   22,167    26,376
                 Deposits                 58,786    87,626 117,374 141,300 189,238 236,547 295,684
                 - Growth (%)               46.5       49.1          33.9       20.4      33.9     25.0      25.0
                 Borrowings                5,196      5,624     10,185        10,014    16,502   20,561    25,701
                 Tier 2 Capital            3,501      3,429      5,334         7,156     9,766   12,208    15,260
                 Other Liab. & Prov.       2,381      4,130      4,613         6,133     8,209   10,515    14,582
                 Total Liabilities        73,257 109,578 147,721 180,648 242,713 302,422 378,028
                 Cash Balances             4,661      7,306      9,419         9,474    13,886   15,376    19,219
                 Bank Balances             2,257      5,199      5,598         5,733     7,522    9,373    11,716
                 Investments              26,897    33,705      46,330        55,975    71,992   91,145 114,034
                 Advances                 36,876    59,661      81,557 104,343 142,408 178,010 222,512
                 - Growth (%)               65.3       61.8          36.7       27.9      36.5     25.0      25.0
                 Fixed Assets               673        923       1,073         1,222     2,273    2,747     3,331
                 Other Assets              1,892      2,785      3,744         3,901     4,632    5,772     7,215
                 Total Assets             73,257 109,578 147,721 180,648 242,713 302,422 378,028
                 - Growth (%)               47.3       49.6          34.8       22.3      34.4     24.6      25.0




April 23, 2011                                                                                                11
                                                        Axis Bank | 4QFY2011 Result Update



                 Ratio analysis
                 Y/E March                      FY07    FY08    FY09    FY10    FY11 FY12E FY13E
                 Profitability ratios (%)
                 NIMs                             2.7     2.9     3.0     3.1     3.2     3.0     3.0
                 Cost to Income Ratio            47.1    49.2    43.8    42.3    42.7    44.1    44.5
                 RoA                              1.1     1.2     1.4     1.5     1.6     1.6     1.6
                 RoE                             21.0    17.6    19.1    19.2    19.3    20.7    22.1
                 B/S ratios (%)
                 CASA Ratio                      39.9    45.7    43.1    46.7    41.1    40.3    39.6
                 Credit/Deposit Ratio            62.7    68.1    69.5    73.8    75.3    75.3    75.3
                 CAR                             11.6    13.7    12.8    14.7    13.3    13.0    12.6
                 - Tier I                         6.4    10.2     8.7    10.4     8.9     8.5     8.1
                 Asset Quality (%)
                 Gross NPAs                       1.1     0.8     1.1     1.3     1.1     0.9     0.8
                 Net NPAs                         0.7     0.4     0.4     0.4     0.3     0.2     0.2
                 Slippages                        0.8     1.0     1.5     2.2     1.4     1.0     1.0
                 Loan Loss Prov. /Avg. Assets     0.1     0.4     0.6     0.8     0.5     0.3     0.3
                 Provision Coverage              36.4    49.8    63.6    68.2    74.3    78.0    77.4
                 Per Share Data (`)
                 EPS                             23.4    29.9    50.6    62.1    82.5   101.4   128.8
                 ABVPS (75% cover.)             114.7   241.6   281.6   393.8   462.5   532.4   631.6
                 DPS                              4.5     6.0    10.0    12.0    14.0    20.5    25.5
                 Valuation Ratios
                 PER (x)                         61.9    48.4    28.7    23.4    17.6    14.3    11.3
                 P/ABVPS (x)                     12.6     6.0     5.1     3.7     3.1     2.7     2.3
                 Dividend Yield                   0.3     0.4     0.7     0.8     1.0     1.4     1.8
                 DuPont Analysis
                 NII                              2.5     2.8     2.9     3.0     3.1     2.9     2.9
                 (-) Prov. Exp.                   0.6     0.6     0.7     0.7     0.6     0.4     0.4
                 Adj. NII                         2.0     2.2     2.2     2.3     2.5     2.5     2.5
                 Treasury                         0.1     0.2     0.2     0.4     0.2     0.1     0.1
                 Int. Sens. Inc.                  2.1     2.4     2.4     2.7     2.7     2.6     2.5
                 Other Inc.                       1.5     1.7     2.0     1.9     2.0     2.0     2.1
                 Op. Inc.                         3.6     4.2     4.4     4.6     4.7     4.6     4.6
                 Opex                             2.0     2.4     2.2     2.3     2.3     2.2     2.2
                 PBT                              1.6     1.8     2.2     2.3     2.4     2.4     2.4
                 Taxes                            0.5     0.6     0.8     0.8     0.8     0.8     0.8
                 RoA                              1.1     1.2     1.4     1.5     1.6     1.6     1.6
                 Leverage                        19.6    15.0    13.6    12.5    12.1    13.1    13.8
                 RoE                             21.0    17.6    19.1    19.2    19.3    20.7    22.1




April 23, 2011                                                                                    12
                                                                                              Axis Bank | 4QFY2011 Result Update




  Research Team Tel: 022 - 39357800                   E-mail: research@angelbroking.com                    Website: www.angelbroking.com

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  Disclosure of Interest Statement                                                Axis Bank
  1. Analyst ownership of the stock                                                  No
  2. Angel and its Group companies ownership of the stock                            Yes
  3. Angel and its Group companies' Directors ownership of the stock                 Yes
  4. Broking relationship with company covered                                       No

  Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors


  Ratings (Returns):              Buy (> 15%)                            Accumulate (5% to 15%)                     Neutral (-5 to 5%)
                                  Reduce (-5% to 15%)                    Sell (< -15%)



April 23, 2011                                                                                                                             13

				
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