Rating - Outperformer
Price - Rs723
Target Price - Rs921
Implied Upside -  27.4%

Axis Bank has been one of the
best performing new-age private sector banks over the last couple of
years. However, the bank’s Q1FY09 financial performance, which was
higher than street expectations, was marred by deterioration in asset
quality levels mainly in the credit card portfolio. But deterioration in
asset quality is a system-wide risk (emanating from higher interest rates
and slowdown in the economy) and not specific to Axis Bank. The bank’s
earnings trajectory is likely to remain the highest among its peers. It also
has provision coverage of ~79% (including accumulated write-offs). Thus
it makes Axis bank better placed than its peers in absorbing asset quality
risks.