Axis Bank's loan book grew a robust 45% compared with an industry average of 21% between 2006 and 2011 due to its strong branch network. A strong loan book along with healthy fee income have boosted profit at a CAGR of almost 50% in 2007-11. Non-performing assets have been more or less stable for Axis. At the current P/E multiple of 12, the stock is reasonably valued.
The scrip has given negative returns in the near term
The banking sector is likely to under perform in the next 2 quarters and the prices are likely to dip further till December 2011. Investors can buy the scrip around Rs.800 levels and hold for 2-3 years for a decent return on investment.
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