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Axis Bank to Double in 2 Years – Goldman Sachs

September 26, 2008

Goldman Sachs [GS] in a report has released few stocks in the Asia-PAC region which have the potential to double within the next 2 years from current levels and Axis Bank from India has made it to the list.

According to GS strong consumer and corporate banking franchise, the latter to be driven by branch expansion, Axis is poised to emerge as a key competitor within Indian financial services. Corporate Banking will see strong capitalization, breadth of products, and cost competitiveness as key advantages.Management’s differentiated approach in network planning, product focus and well-honed customer segmentation process as key competitive advantages in the Consumer Banking vertical.

Axis bank’s superior credit selection process, portfolio orientation in favor of large corporates with stronger financial position and strong profitability, will protect it against an adverse environment.

At historical average P/E of 14.4X, implying a price of Rs 1,400, franchise growth value of 30% and normalized ROE of 20%. Axis is likely to report an EPS of Rs 40.59 and Rs 57 for FY09 and FY10 respectively.

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