Sunday, August 28, 2011

Axis Bank - Buy on declines

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

Time Span Price Change %Change
Today 999.85 -21.80 -2.13
Week 1,072.75 -51.10 -4.76
Month 1,300.10 -278.45 -21.41
Three Months 1,218.95 -197.30 -16.18
Six Months 1,230.70 -209.05 -16.98
One Year 1,364.00 -342.35 -25.09

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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Ravina Consulting
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3rd Cross Kamanahalli

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