We had seen a lot of volatility in the stock price of Axis Bank in the last 3 weeks. How does Axis bank business looks after its third quarter results.

  Q3 – 2016 Q3 – 2015 % Change 9 Mts -16 9 Mts – 15 % change
Interest Income 10,193.33 8,889.74 15% 30,089.08 25,781.52 17%
Other Income 2,337.78 2,039.07 15% 6,677.45 5,677.73 18%
Operating expenses 2,514.78 2,314.03 9% 7,252.75 6,730.07 8%
Provision & Contingencies 712.59 507.15 41% 2,541.53 1,618.79 57%
Net Profits 2,175.30 1,899.76 15% 6,069.38 5,177.23 17%
Gross non-performing asset   5,724.05 3,901.59 47%
Net non-performing asset   2,514.09 1,250.67 101%
Deposits   338,342.83 291,198.65 16%
Loan Book       315,367.23 260,567.23 21%


Looking at the result, in our opinion the bank is seeing a strong growth in credit as their loan book is growing very strong and deposits are also growing steadily. Net profits are also growing strongly even after provisioning total net non-performing assets as per RBI guidelines. Interest income as well as other incomes are growing steadily. The management had come ahead and given a guidelines that another Rs 1,000 – Rs 1,200 crore of gross NPA’s in its 4th quarter and this number will go down in the coming quarters.

Coming to the valuations point of view, we think its intrinsic value for this financial year will be in range of Rs 330 – Rs 350. Axis bank business model can generate approximately Rs 100 – Rs 150 per share in its intrinsic value for next two years. Slipping down below Rs 375 per share last week was a great opportunity to accumulate or buy fresh stocks.

Axis bank is one of the top five holdings in our portfolio and we did accumulated few more shares while it was at depressive pricing last week.

Aziz Dodhiya is the chief investment officer for the Valueoperations funds which operates in the Indian market as an FPI (Foreign Portfolio Investor). We do not offer any personal advice to buy or sell any stocks and the views that are shared by Aziz might not incline to your personal investment strategy and this is the reason we advise to take professional advice before going ahead with our views.