SNI MARKET OUTLOOK UPDATE 18TH OCTOBER 2013 : Expect market to open on a positive note on account of global cues. The S&P 500 closed at a record high as investor confidence grew following a last‐minute deal to avoid a U.S. default. Asian markets are witnessing mixed trend. China’s GDP number and Industrial production came inline with Bloomberg expectation. HCL Tech reported PAT above expectation on account of better operating margin. Axis Bank’s 2QFY14 PAT grew 21% YoY to INR13.6b (14% above estimates) with healthy margins (3.8%, down 8bp QoQ, NII 6% above est). Maintain Buy with a target price of INR1,300 (1.4x FY15E BV; 1.5x average FY14‐15E BV). Research Updates: AXIS BANK 2QFY14: Above est; NIM surprise positively, Traction in retail business continues; fee income and asset quality disappoints‐ Axis Bank’s 2QFY14 PAT grew 21% YoY to INR13.6b (14% above estimates). Healthy margins (3.8%, down 8bp QoQ, NII 6% above est) and beat on non interest income (led by one off income on overseas operations of INR2.8b) led to 16% higher than estimated PPP. One off gain was utilized for a) creating contingency provision of INR1.5b b) for transfer loss of INR1.15b and c) accounting for enhanced provisioning requirement on restructured loan of INR250m. AXSB continues to capitalize on its franchise with retail loan share increasing to 30% vs 28.5% in 1Q and 25.7% in 2QFY13 and core CASA ratio remaining healthy at 39%. SA growth on an average daily basis strong at 19% YoY. However, retail fees are moderating and grew just 9% YoY, impact of close monitoring and competition, in our view. Retail assets fees are still strong at 30% YoY. We have upgraded the earnings estimates by 12/6% for FY14/15 to model better than expected NIM performance. Further, better net investment gain outlook is also driving earnings upgrade for FY14. RoA and RoE are expected to remain strong at 1.5%+ and ~16% over FY14/15. The stock trades at 1.4x FY14BV and 1.2x FY15 BV. Maintain Buy with a target price of INR1,300 (1.4x FY15E BV; 1.5x average FY14‐15E BV). For more details log on to sainathinvestment
Posted on: Fri, 18 Oct 2013 03:30:14 +0000
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