The share price of Axis Bank Limited increased by 1.13% on Thursday. Currently, the shares are trading at ₹758.90. In the last five days, its share price has increased by 5.54%.
Axis Bank has acquired Citi Bank’s consumer business in India for ₹12,325 crores. The sale excludes the bank’s institutional client businesses in India. Axis Bank already has a retail book of nearly Rs 4 trillion, and because of this deal, it will acquire about 3 million unique customers of Citibank India, seven offices, 21 branches and 499 ATMs across 18 cities.
“Axis Bank’s large loan book would be complemented by Citibank’s affluent customer segment, creating product and branch footprint synergies,” the private lender said.
Various brokerages have given targets with respect to Axis Bank’s shares:
HDFC Securities: Target ₹ 950
The brokerage has given a buy call on Axis Bank with a target price of ₹ 950 and a time period of one year.
ICICI Securities: Target ₹ 1,050
Analysts at ICICI Securities have a buy call on Axis Bank with a target price of ₹,1,050 and a time period of one year.
Prabhudas Lilladher: Target ₹ 975
“Customer retention is the key for benefits to accrue earlier. Axis could be a beneficiary of an upcoming growth cycle, as asset quality risk has receded. Discount to ICICI should narrow and hence rolling forward to FY24E ABV, we raise multiple from 2.1x to 2.3x increasing the TP from Rs 860 to Rs 975. Upgrade from Accumulate to ‘Buy’,” said analysts at Prabhudas Lilladher.
CLSA, Target: ₹ 1,080
CLSA said that the deal covers credit cards, loans, wealth management and retail banking. It said that it will be 8-9 per cent book dilutive but would also be 150-basis points ROE accretive. The brokerage said that the deal valuations are fair and are not earning dilutive. It added that Citi’s India retail is an attractive business and that customer retention there will be the key. It has suggested a target of ₹1,080 on Axis Bank’s stock.
JP Morgan, Target: ₹ 770
The brokerage expects PS dilution of about 4-7 per cent in FY24 but said the longer-term benefits of the deal are positive. It suggested a target of ₹ 770 on the stock.
Macquarie, Target: ₹ 790
It said that Axis Bank trades at 1.8 times FY23 price to book value. It has a neutral rating on the stock with a target price of ₹ 790 per share.
Phillip Capital, Target: ₹ 950
Phillip Capital said that Axis bank’s customer positioning has a gap in the affluent customer segment and this deal provides access to it. It added that such deals of affluent retail franchisees are rare in the banking industry and hence come with a premium. The brokerage suggested a target of ₹950 on the stock and said that the larger benefits are subject to Axis Bank’s ability to contain customer attrition, rationalise cost and cross-sell.
Emkay Global, Target: ₹ 1,020
The brokerage suggested a target of ₹1,020 on the stock and said, “Axis will have to deliver on business retention/upscaling and drive cost/revenue synergies after the acquisition, leading to better RoAs and, thus, justifying high valuations paid for the acquisition.”
It said that Factoring in the bank’s estimated RoE of 21.7 per cent and the net worth of Rs 390 crore, the implied P/BV at 4.1 times is not too high for a readily available profitable retail business with RoA of 1.6 per cent
Edelweiss, Target: ₹ 1,000
“In addition to the deal being positive, we expect Q4FY22 earnings to serve as a re-rating trigger. And we expect 7 per cent QoQ loan growth and a lower cost/asset ratio for the quarter. Valuation is undemanding at 1.6x PBV FY24E,” the brokerage said while suggesting a target of ₹ 1,000 on the stock.
Jefferies: Target ₹ 1,040
“The management sees the acquisition to breakeven in CY24 (almost FY25); this implies limited upside till then, with potential capital raise in 12-15 months. We maintain our Buy rating with a target price of ₹1,040,” Jefferies said in a note.
Ambit: Target ₹ 997
Analysts at Ambit said that “Axis is a strong banking franchise with competitive cost of funds, robust distribution channel, solid presence in payment ecosystem and improving digital capabilities. The acquisition of Citi’s India retail business should strengthen Axis’ competitive positioning as it gets a foothold in the affluent segment. Axis is our top pick in private banks with a target price of ₹997.”
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