Axis is the third-largest private sector bank in India in terms of asset size, with a balance sheet of ~7.1 lakh cr and advances of 4.48 lakh cr (of which retail contributes 48.6%). It has a network of over 3,882 branches with CASA of 47.7%. The appointment of Amitabh Chaoudhary as MD & CEO for three years beginning from January 01, 2019, shrinking stressed asset and incremental lending to high rated corporates would aid Axis Bank to restore investor confidence.

Outlook & Valuation: Axis Bank currently trades at 2.1x its FY2020E price to book
value (after adjusting value of subsidiaries). We expect the stock to get re rated owing to (1) new leadership, (2) limited stressed loan pool, (3) improvement in return ratios (ROA/ROE – 1.1%/12.2% by FY2020E). We recommend Buy on the stock, with a target price of `750.

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