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Tuesday, July 15, 2008

Axis Bank stock- buy recommendation

IIFL has recommended a buy rating on Axis Bank with a 12-month target price of Rs 905 in its July 15, 2008 research report. "Axis Bank delivered a strong set of numbers, with 1QFY09 net profit growing by 89% YoY to Rs 3301 million versus our forecast of Rs 2272 million. Core operating parameters remained robust, with no major concerns on asset quality. Provisions rose by 3x in 1QFY09, with higher MTM losses on both bond and equity portfolios. However, we are keeping our earnings estimates unchanged, keeping in mind the probable MTM losses in the current volatile market scenario."

"The bank’s well-defined strategy towards CASA collection is a key strength that is difficult for many other banks to replicate. We also expect loan growth to remain robust thanks to its strong and growing franchise and no material deterioration in asset quality. We expect 33% earnings CAGR during FY08-10. The stock is trading at a PB of 2.3x and PE of 15.8x on FY09ii and remains our top pick in the sector. Buy with 12-month target of Rs 905," says IIFL's research report

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