Buy This Banking Stock For +16% Return, In 6 Months: HDFC Securities

The brokerage firm HDFC Securities has recommended investors to buy stocks of Axis Bank with a potential upside of 16.66%, within a target period of 6 months.

Target Price

The Current Market Price (CMP) of Axis Bank is Rs. 672.05. The brokerage firm, HDFC Securities has estimated a Target Price for the stock at Rs. 784. Hence the stock is expected to give a 16.66% return, in a Target Period of 6 months.

Stock Outlook
Current Market Price (CMP)	Rs. 672.05
Target Price	Rs. 784
6 months	16.66%

Company performance

Axis Bank's Net Interest Income (NII) during Q2, FY22 was up by 7.8% YoY and 1.8% QoQ. Margins were down by 7 bps sequentially due to a change in mix. Fee income grew 17% YoY and 21% QoQ. Retail fees grew 19% YoY and 23% QoQ; and constituted 63% of the overall fees.

Comments by HDFC Securities

According to HDFC Securities, "We like Axis Bank because of its strong balance sheet with granular, sticky liability base, lower stress levels, higher PCR (Provision Coverage Ratio) and adequate CAR (Capital Adequacy Ratio). The loan book quality has improved significantly post the new top management. We feel that investors can buy Axis bank between Rs. 676-670 and add more at Rs. 614-608 band. We expect the Base case fair value of Rs. 737 and the Bull case fair value of Rs. 784 over the next 2 quarters."

About the company

Axis Bank is the third-largest private sector bank in India, and the bank has also hired 10,300 employees in the last 1 year. Although the bank's operating profit has declined by 14% YoY. However, with lower provision requirements (down 47% QoQ), Axis Bank reported an all-time high quarterly profit of Rs.31.33 bn in Q2FY22, up to 86% YoY.

Disclaimer

The above stock was picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

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