CMP: ₹1,245.15
Axis Financial institution has navigated tight liquidity situations nicely to keep up NII progress (CAGR of twenty-two.7 per cent over FY22-FY24), whereas it constructed sturdy provision buffers, with 78 per cent PCR on NPAs and 1.2 per cent provision on non-NPA ebook.
We anticipate opex progress moderation (to fifteen.2 per cent CAGR over FY24-FY26e from 22.1 per cent over FY22-FY24) with Citi operations built-in, and credit score prices to develop barely to 0.6 per cent over FY25/FY26. Whereas the financial institution benefited from charge hikes in FY23, it enhanced its share of deposits repricing inside 6months/1 12 months over FY24 (by 375/576bps) to navigate NIM pressures from potential charge cuts.
It has maintained a buffer provision of ₹5,000 crore for transition to ECL norms (out of a complete of ₹11,730 crore in non-NPA provisions) and has maintained sturdy liquidity profile, with 120 per cent + LCR. This could allow it to report 15/16 per cent progress in deposits/advances over FY24-FY26, with NIMs trending above 3.8 per cent, even within the face of potential charge cuts.
We retain our optimistic stance on Axis Financial institution, and anticipate it to ship RoA/RoE of 1.74/16.5 per cent by FY26.
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