HDFC Securities Recommends Buy Large Cap Bank Stock, Sees 32% Gains, Board Announces Dividend

Broking firm HDFC Securities in its recent equity report on Axis Bank (AXSB) has assigned a "Buy" on the stock of the Bank with a target price of Rs 1,130/share. The brokerage sees 32% gains if purchased at the current market price. Axis Bank is a large-cap private sector major bank having a market capitalisation of Rs 2,64,609 crore.

On April 27, 2023, Axis Bank announced the results for the March quarter of FY23, where it reported a standalone loss due to the buying cost of Citi Bank's India consumer business during the quarter. Along with the results, in the Board meeting, the bank also recommended final dividend of Rs. 1/share for the financial year ending 31st March 2023.

Recommends A Final Dividend Of Re. 1/Share

According to an exchange filing by Axis Bank, "Recommended a final dividend of Re.1/- per equity share of face value of Rs. 2/- each (50%) for the financial year ended March 31, 2023, subject to approval of the members of the Bank at the ensuing 29th Annual General Meeting ("AGM"). The dividend, if approved by the members, will be paid on or after five days from the date of conclusion of the ensuing AGM. The AGM date and book closure date for the purpose of the payment of final dividend will be announced in due course."

Stock Overview - Current MarketP Price, 52 Week High/Low, Returns

On Friday, the stock of Axis Bank closed 2.43% below at Rs 860/share. It traded its 52 week low on 23 June 2023 at Rs 618.25/share and 52 week high on 4 January 2023 at Rs 970/share. It declined 0.49% in 1 week and gained 3.31% in 1 month. It gave 10.28% positive return in 1 year, 88.82% in 3 years and 59.5% in 5 years, respectively.

Buy Stock of Axis Bank For A Target Price Of Rs 1,130/Share

HDFC Securities said, "Axis Bank (AXSB) reported a one-time loss from accounting for its merger with Citi Bank's India consumer business, ex of which it delivered a beat, led by strong loan growth (+16% YoY standalone), healthy fee income and lower credit costs (22bps annualised). NIMs moderated marginally (-4bps QoQ) on account of excess liquidity on the balance sheet (LCR at 129%) and catch-up in funding costs following accelerated deposit mobilisation."

It added, "That said, the loan-to-deposit ratio (~89%) continues to remain high and we believe AXSB will have to further accelerate efforts to match its targeted loan growth (management has guided for loan growth of 400-600bps above industry), which is likely to impede medium term NIMs. We tweak our FY24/FY25E earnings estimates by +3% each to adjust for normalised credit costs and higher opex on continued investments in growth. Maintain BUY with a revised SOTP-based target price of INR1,130 (standalone bank at 2.0x Mar-25 ABVPS)."

Disclaimer - The stock has been picked from the brokerage report of HDFC Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.