Axis Bank

Private sector lender Axis Bank reported marginal rise in interest earned at Rs. 9,936 crore, up 2.5% QoQ, but 14.5% lower other income on account of lower treasure gains, lead to 1.2% QoQ contraction in bank’s total income to Rs. 12,234 crore. However, bank’s core operations strengthened with net interest income rising 6.8% sequentially to Rs. 4,056 crore. Despite lowering of the cost to income ratio from 38.1% in Q4FY15 to 35.6% in Q1FY16, over 50% surge in provisions and contingencies to Rs. 1,122 crore, contracted net profit by 9.3% QoQ to Rs. 1,978.

Asset quality of the bank, however slipped just a tad bit, which came in better than expectation. Net NPAs of Rs. 1,461 crore, as of 30-06-15 represented 0.48% of the net advances, which is just 4 basis points higher than 0.44% on 31-03-15. Thus, there were no negative surprises in the Q1 results, which was most feared.

Thus, Axis Bank’s standalone EPS for Q1FY16 came in at Rs. 8.34, as against Rs. 31.18 in FY15. Its BVPS is currently at Rs. 197. Thus, share is being discounted by PBV multiple of almost 3 times, based on historic numbers. The PE multiple currently is less than 17 times, based on current year expected earnings.