7/30/2019 26042013131311Axis Bank Ltd Q4FY13 Result Update

1/7

Quarterly Result Update

Axis Bank Ltd.

Going Strong

Thursday, 25th

April, 2013.

Outlook

Beating street estimates, Axis Bank delivered strong profits of Rs 1,555 crore (up 22% YoY) on the back of higherinterest, strong other income and improved cost to income ratio. The NIM expansion to 3.7% (+15 bps YoY) thoughwas above expectations is a one off due to the FPO funds and is expected to water down in FY14.

With the management guidance of NIM to stay in the 3.25% - 3.50% range in FY14, coupled with loan restructuring

and the expected 25 bps rate cut by the central bank on May 3, we recommend a HOLD on the stock. At a CMP ofRs 1,503, the stock is trading at 1.9x and 1.5x, its estimated P/BV for FY14E and FY15E.

Key Takeaways

Q4FY13 net profit grew by 22% YoY to Rs 1,555 crore, aided by higher interest as well as other income. NIIincreased by 24% YoY to Rs 2,665 crore in Q4FY13 from Rs 2,146 crore in Q4FY12. This was primarily drivenby healthy growth in NIM to 3.7% YoY in Q4FY13 from 3.6%. Other income rose 26% YoY to Rs 2,007 crore inQ4FY13 with trading income up 63% YoY to Rs 238 crore.

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

0.00

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13

(%)

Rs. Crore

NII NII Growth (RHS)

Cost - income ratio of the bank reduced to 40% YoY in Q4FY13 from 45%.

Recommendation (Rs)

CMP 1,503Rating HOLD

Index Details

Sensex 19,407

Nifty 5,916

Industry Banks

Scrip Details

Mkt Cap (Rs cr) 70,399

Eq Shares O/s (Cr) 46.8

Avg Vol (Lakhs) 2.4

52 Week H/L 1519/922

Dividend Yield (%) 1.1

Face Value (Rs) 10.0

Latest shareholding pattern (%)

Promoters 33.9

Indian Institutions 8.5

FIIs 40.9

Public 16.6

Total 100.0

Stock performance (%)

1m 3m 6m

Axis Bank 14.6 8.6 21.4Nifty 5.0 -2.6 3.7BSE - Bank 13.8 -0.1 9.0

7/30/2019 26042013131311Axis Bank Ltd Q4FY13 Result Update

2/7

Quarterly Result Update

Thursday, 25th

April, 2013

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%7.00%

8.00%

37.0%

38.0%

39.0%

40.0%

41.0%

42.0%

43.0%

44.0%45.0%

46.0%

Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13

(%)

C ost to Incom e N IM (RHS) Co st o f F un ds (RH S)

In Q4FY13, Axis Bank witnessed a healthy growth in advances and deposits with the total advances up by 16%YoY to Rs 1,96,966 crore in Q4FY13, largely driven by a strong growth in retail loans. Retail advances grew44% YoY to Rs 53,960 crore in Q4FY13 and accounted for 27% of net advances. The management expectsthe retail portfolio to be 30% of the total loans by FY14. Non-retail loans on the other hand have recorded anincrease of 8% YoY, in which the SME segment has shown a healthy growth of 26% YoY and stood at Rs29,922 crore.

-

50,000

100,000

150,000

200,000

250,000

300,000

Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13

Rs.Crore

Advances Deposits

Total deposits grew by 14.8% YoY to Rs 2,52,614 crore in FY13 while the bank's total assets grew by 19.2%YoY to Rs 3,40,561 crore in FY13. Share of CASA deposits grew 23% YoY to Rs 112,100 crore in Q4FY13,which contributed to 36% of total deposits. Retail term deposits grew 24% YoY to Rs 59,531 crore andcomprise 42% of total term deposits.

7/30/2019 26042013131311Axis Bank Ltd Q4FY13 Result Update

3/7

Quarterly Result Update

Thursday, 25th

April, 2013

36.00%

37.00%

38.00%

39.00%

40.00%

41.00%

42.00%

43.00%

44.00%

45.00%

-

50,000

100,000

150,000

200,000

250,000

300,000

Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13

Rs'000Crore

Deposits CASA (RHS)

GNPA ratio rose by 12 bps YoY to 1.06% in Q4FY13 as against 0.94% whereas NNPA ratio rose marginally by7 bps YoY to 0.32%. Provision coverage declined to 79% in Q4FY13, which included prudential write-offs. Thebank made a contingency provision of Rs 375 crore for the additional loan accounts that show some stress onrepayments. Restructured assets stood at Rs 791 crore during Q4FY13.

72.0%

73.0%

74.0%

75.0%

76.0%

77.0%

78.0%

79.0%

80.0%

81.0%

82.0%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13

(%)

Net NPA Gross NPA Provision Coverage Ratio (RHS)

RoA and RoE were at 1.94% and 21.6% respectively in Q4FY13 whereas capital adequacy ratio stood at 17%with Tier 1 at 12.2%.

7/30/2019 26042013131311Axis Bank Ltd Q4FY13 Result Update

4/7

Quarterly Result Update

Thursday, 25th

April, 2013

11.4011.80

13.66 13.5113.92

15.17 17.00

8.50 8.309.45

9.499.92 10.27

12.23

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13

(%)

Capital Adequacy Ratio Tier I

Axis announced a dividend of Rs 18 per equity share of paid up value of Rs 10/-.

7/30/2019 26042013131311Axis Bank Ltd Q4FY13 Result Update

5/7

Quarterly Result Update

Thursday, 25th

April, 2013

Description Q4FY13 Q4FY12 % Chg. Q4FY13 Q3FY13 % Chg. FY201303 FY201203 % Chg.

Interest Earned 7047.6 6060.3 16.3 7047.6 6964.9 1.2 27182.6 21994.7 23.6Interest on Advances 4898.8 4257.9 15.1 4898.8 4906.7 -0.2 19166.2 15379.4 24.6% of Total Int. Earned 69.5 70.3 - 69.5 70.4 - 70.5 69.9 -Interest on Balances with RBI 41.7 23.9 74.4 41.7 24.7 68.8 111.3 98.4 13.0% of Total Int. Earned 0.6 0.4 - 0.6 0.4 - 0.4 0.4 - Income From Investments 2029.7 1737.6 16.8 2029.7 2014.3 0.8 7747.0 6394.3 21.2% of Total Int. Earned 28.8 28.7 - 28.8 28.9 - 28.5 29.1 - Others 77.4 41.0 88.7 77.4 19.3 301.0 158.1 122.6 29.0% of Total Int. Earned 1.1 0.7 - 1.1 0.3 - 0.6 0.6 -

Other Income 2007.2 1587.6 26.4 2007.2 1615.4 24.3 6551.1 5420.2 20.9Total Income 9054.7 7647.9 18.4 9054.7 8580.3 5.5 33733.7 27414.9 23.0 Interest Expended 4382.9 3914.2 12.0 4382.9 4470.1 -2.0 17516.3 13976.9 25.3Operating Expenses 1872.1 1696.2 10.4 1872.1 1748.7 7.1 6914.2 6007.1 15.1Payment to provisions for Empl 601.4 529.6 13.6 601.4 615.1 -2.2 2377.0 2080.2 14.3 % of Opt. Expenses 32.1 31.2 - 32.1 35.2 - 34.4 34.6 -Other Opt. Expenses 1270.7 1166.6 8.9 1270.7 1133.6 12.1 4537.3 3926.9 15.5% of Opt. Expenses 67.9 68.8 - 67.9 64.8 - 65.6 65.4 - Total Expenses 1872.1 1696.2 10.4 1872.1 1748.7 7.1 6914.2 6007.1 15.1

Operating Profit before prov. & 2799.7 2037.6 37.4 2799.7 2361.5 18.6 9303.1 7430.9 25.2% of Total Int. Earned 39.7 33.6 - 39.7 33.9 - 34.2 33.8 -Provisions and Contigencies 595.4 139.3 327.4 595.4 386.8 53.9 1750.4 1143.0 53.1PBT 2204.4 1898.3 16.1 2204.4 1974.7 11.6 7552.7 6287.8 20.1% of Total Int. Earned 31.3 31.3 - 31.3 28.4 - 27.8 28.6 -Tax 649.2 621.0 4.5 649.2 627.5 3.5 2373.3 2045.6 16.0 PAT 1555.2 1277.3 21.8 1555.2 1347.2 15.4 5179.4 4242.2 22.1% of Total Int. Earned 22.1 21.1 - 22.1 19.3 - 19.1 19.3 -Paid up equity share capital 468.0 413.2 13.3 468.0 427.2 9.6 468.0 413.2 13.3

EPS (Rs.) 33.2 30.9 7.5 33.2 31.5 5.4 110.7 102.7 7.8Capital Adequacy Ratio 17.0 13.7 334.0 17.0 13.7 330.0 17.0 13.7 334.0 NII 2664.7 2146.1 24.2 2664.7 2494.8 6.8 9666.3 8017.8 20.6NIM 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Gross NPA 2393.4 1806.3 32.5 2393.4 2275.3 5.2 2393.4 1806.3 32.5% of Gross NPA 1.1 0.9 12.0 1.1 1.1 0.0 1.1 0.9 12.0Net NPA 704.1 472.6 49.0 704.1 678.7 3.7 704.1 472.6 49.0% of Net NPA 0.3 0.3 7.0 0.3 0.3 0.0 0.3 0.3 7.0ROA(%) 0.5 0.5 1.0 0.5 0.4 10.0 0.0 0.0 -

7/30/2019 26042013131311Axis Bank Ltd Q4FY13 Result Update

6/7

Quarterly Result Update

Thursday, 25th

April, 2013

P/E Bands

0

500

1000

1500

2000

2500

3000

3500

Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14

CMP 7X 9.28X 11.56X 13.84X 16.12X

P/B Bands

0

500

1000

1500

2000

2500

3000

Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14

CMP 1.3X 1.63X 1.96X 2.29X 2.62X

Nifty Comparison

40

60

80

100

120

140

160

Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13

Axis Bank NIFTY

BSE-Bankex Comparison

40.0

60.0

80.0

100.0

120.0

140.0

160.0

Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13

Axis Bank BANKEX

Rating

AXIS

HDFC BANK

HDFC

ICICI BANK

IDFC

KOTAK

PNB

SBI

BOB

Indusind

10

14

18

22

1.0 2.0 3.0 4.0 5.0 6.0

EXPECTED2YRBVCAGR%

RATING SCORE

7/30/2019 26042013131311Axis Bank Ltd Q4FY13 Result Update

7/7

Quarterly Result Update

Thursday, 25th

April, 2013

Ventura Securities Limited

Corporate Office: C-112/116, Bldg No. 1, Kailash Industrial Complex, Park Site, Vikhroli (W), Mumbai 400079

This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but noresponsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in theirarticles. Neither Ventura Securities Limited nor any of the contributors accepts any liability arising out of the above information/articles. Reproduction in whole orin part without written permission is prohibited. This report is for private circulation.