2QFY2013 Result Update | Banking

October 16, 2012

Axis Bank
Performance Highlights

Particulars (` cr) NII Pre-prov. profit PAT 2QFY13 2,327 2,178 1,124 2QFY13 2,180 1,964 1,154 % chg (qoq) 6.7 10.9 (2.6) 2QFY12 2,007 1,776 920 % chg (yoy) 15.9 22.7 22.1

BUY
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Banking 47,521 1.2 1309/785 463,062 10 18,578 5,648 AXBK.BO AXSB@IN

`1,146 `1,328
12 Months

Source: Company, Angel Research

For 2QFY2013, Axis Bank reported a 22.1% yoy growth in its net profit to `1,124cr, which was in-line with our estimates. Key highlights of the result were sequential improvement in NIMs, healthy growth in fee income and stable NPA ratios. NIMs improve sequentially on lower deposit costs; NPA levels stable: The banks loan book grew by a healthy 22.9% yoy, while deposits grew by 21.2% yoy. The growth in the loan book was primarily on account of higher retail lending, with strong growth witnessed in both home and auto loans segments. CASA deposits registered a sequential growth of 9.9%, which was largely due to a strong 15.2% qoq growth witnessed in current deposits. Overall, reported NIMs improved by 9bp qoq to 3.46%, on account of lower deposits costs. The bank registered a healthy growth in its non-interest income excluding treasury, largely driven by strong growth in fee income from the retail and agri & SME segments. Slippages for the bank during the quarter came in at `628cr, which included the account of Deccan Chronicle. Slippages and restructuring taken together amounted to `2,000cr in 1HFY2013 and the management has guided for a similar number in 2HFY2013. The bank registered treasury gains of `207cr during the quarter and used the opportunity to provide aggressively for NPAs (~407cr) and create a contingency reserve of `115cr. Along with recoveries and upgrades of `136cr, this helped the bank to keep its net NPA ratio at 0.33% (on an absolute basis net NPAs increased by 8.2% qoq to 47cr), which was a positive surprise. Gross NPAs also remained in check at 1.1%, due to large write-offs. The banks (PCR) improved by 100bp to 80.0% in 2QFY2013. The banks cumulative restructured book as of 2QFY2013, which is reported facility-wise, stood at `4,068cr (2.3% of net advances). Outlook and valuation: Axis Bank is trading at 1.6x FY2014E ABV 58% discount to HDFC Bank vs an average discount of 35% over the past five years (which we believe over-discounts asset quality concerns). We remain positive on the bank, owing to its attractive CASA franchise, multiple sources of sustainable fee income and reasonable growth outlook. We maintain our Buy recommendation on the stock with a target price of `1,328.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 37.3 13.1 42.0 7.7

Abs. (%) Sensex Axis Bank

3m 8.6 9.7

1yr 8.8 3.8

3yr 7.2 13.9

Key financials (Standalone)

Y/E March (` cr) NII % chg Net profit % chg NIM (%) EPS (`) P/E (x) P/ABV (x) RoA (%) RoE (%)
Source: Company, Angel Research

FY2011 6,563 31.1 3,388 34.8 3.2 82.5 13.9 2.5 1.6 19.3

FY2012 8,018 22.2 4,242 25.2 3.1 102.7 11.2 2.1 1.6 20.3

FY2013E 9,498 18.5 4,987 17.6 3.1 116.8 9.8 1.8 1.6 20.0

FY2014E 11,564 21.8 5,894 18.2 3.2 138.0 8.3 1.6 1.6 20.2

Vaibhav Agrawal
022 3935 7800 Ext: 6808 vaibhav.agrawal@angelbroking.com

Varun Varma
022 3935 7800 Ext: 6847 varun.varma@angelbroking.com

Sourabh Taparia
022 3935 7800 Ext: 6872 sourabh.taparia@angelbroking.com

Please refer to important disclosures at the end of this report

Axis Bank | 2QFY2013 Result Update

Exhibit 1: 2QFY2013 performance summary (Standalone)

Particulars (` cr) Interest earned - on Advances / Bills - on investments - on balance with RBI & others - on others Interest Expended Net Interest Income Other income Other income excl. treasury - Fee Income - Treasury Income - Others Operating income Operating expenses - Employee expenses - Other Opex Pre-provision Profit Provisions & Contingencies - Provisions for NPAs - Other Provisions PBT Provision for Tax PAT
Source: Company, Angel Research

2QFY13 6,687 4,736 1,897 22 32 4,360 2,327 1,593 1,386 1,343 207 43 3,920 1,742 578 1,164 2,178 509 407 102 1,669 545 1,124

1QFY13 6,483 4,625 1,806 23 29 4,303 2,180 1,336 1,185 1,154 150 31 3,515 1,552 583 969 1,964 259 261 (2) 1,705 551 1,154

% chg (qoq) 3.2 2.4 5.0 (3.9) 11.2 1.3 6.7 19.3 16.9 16.4 38.0 37.4 11.5 12.2 (0.8) 20.1 10.9 96.8 55.9 (2.1) (1.1) (2.6)

2QFY12 5,276 3,688 1,549 11 28 3,269 2,007 1,235 1,207 1,121 28 87 3,242 1,467 499 968 1,776 406 247 159 1,370 450 920

% chg (yoy) 26.7 28.4 22.5 97.1 14.1 33.4 15.9 29.0 14.8 19.9 650.1 (50.9) 20.9 18.8 15.9 20.2 22.7 25.6 64.8 (35.4) 21.8 21.2 22.1

1HFY13 13,170 9,361 3,703 45 61 8,663 4,507 2,929 2,571 2,498 358 73 7,435 3,293 1,161 2,133 4,142 768 668 100 3,374 1,097 2,277

1HFY12 10,157 7,158 2,881 59 59 6,426 3,731 2,403 2,305 2,178 98 127 6,134 2,800 1,009 1,791 3,334 581 400 181 2,753 890 1,863

% chg (yoy 29.7 30.8 28.5 (23.9) 4.3 34.8 20.8 21.9 11.5 14.7 265.4 (42.3) 21.2 17.6 15.1 19.1 24.2 32.1 67.0 (44.7) 22.6 23.2 23.2

Exhibit 2: 2QFY2013 Actual vs. Angel estimates

Particulars (` cr) Net interest income Other income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Company, Angel Research

Actual 2,327 1,593 3,920 1,742 2,178 509 1,669 545 1,124

Estimates 2,313 1,378 3,691 1,636 2,055 386 1,669 542 1,128

Var. (%) 0.6 15.6 6.2 6.5 6.0 32.0 (0.0) 0.7 (0.4)

October 16, 2012

Axis Bank | 2QFY2013 Result Update

Exhibit 3: 2QFY2013 performance analysis (Standalone)

Particulars Balance sheet Advances (` cr) Deposits (` cr) Credit-to-Deposit Ratio (%) Current deposits (` cr) Saving deposits (` cr) CASA deposits (` cr) CASA ratio (%) CAR (%) Tier 1 CAR (%) Profitability Ratios (%) Cost of funds Reported NIM Cost-to-income ratio Asset quality Gross NPAs (` cr) Gross NPAs (%) Net NPAs (` cr) Net NPAs (%) Provision Coverage Ratio (%) Slippage ratio (%) NPA prov. to avg. assets (%)
Source: Company, Angel Research

2QFY13 172,132 235,619 73.1 39,349 56,189 95,538 40.5 13.0 9.0 6.5 3.5 44.4 2,191 1.1 654 0.3 80.0 1.5 0.5

1QFY13 171,146 222,631 76.9 34,165 52,777 86,942 39.1 13.0 9.0 6.7 3.4 44.1 2,092 1.1 605 0.3 79.0 1.1 0.4

% chg (qoq) 0.6 5.8 (382)bp 15.2 6.5 9.9 150bp (4)bp (3)bp (16)bp 9bp 29bp 4.7 4bp 8.2 2bp 100bp 41bp 19bp

2QFY12 140,089 194,455 72.0 35,354 46,786 82,140 42.2 11.4 8.5 6.2 3.8 45.2 1,744 1.1 549 0.3 77.7 1.4 0.4

% chg (yoy) 22.9 21.2 101bp 11.3 20.1 16.3 (169)bp 164bp 51bp 35bp (32)bp (80)bp 25.6 2bp 19.2 (1)bp 231bp 9bp 14bp

Balance sheet growth remains healthy

The banks loan book grew by a healthy 22.9% yoy, while deposits grew by 21.2% yoy. The growth in the loan book was primarily on account of higher retail lending, with 69.0% and 78.5% yoy growth witnessed in home and auto loan segments, respectively. Growth in the large and mid-corporate segment was moderate at 16.0% yoy. The banks exposure to large and mid-corporate borrowers rated below A has risen from 27% in 2QFY2012 to 38% in 2QFY2013, both on account of rating downgrades for corporates (especially in infra) and repayments by corporates rated A and above. The management has maintained its guidance of a above system-average loan growth during FY2013, with primary focus on retail lending (home ,auto) and SME and agri lending (better opportunities and to meet priority sector lending targets). The bank has ambitious plans to increase the share of retail advances to overall book to ~28-29% in the next two years from ~26% currently.

October 16, 2012

Axis Bank | 2QFY2013 Result Update

Exhibit 4: Strong yoy growth in retail loans aided healthy adv. growth
Particulars (` cr) Corporate SME Agri Retail - Housing - Auto - Others Total advances 2QFY13 92,065 23,628 12,153 44,286 33,215 5,757 5,314 172,132 1QFY13 92,887 21,985 15,683 40,591 30,443 5,277 4,871 171,146 % chg (qoq) (0.9) 7.5 (22.5) 9.1 9.1 9.1 9.1 0.6 2QFY12 79,391 20,755 10,616 29,328 19,650 3,226 6,452 140,089 % chg (yoy) 16.0 13.8 14.5 51.0 69.0 78.5 (17.6) 22.9 % to total 53.5 13.7 7.1 25.7 19.3 3.3 3.1 100.0

Source: Company, Angel Research

CASA deposits registered sequentail growth of 9.9%, which was aided by strong 15.2% qoq growth witnessed in current deposits, even as growth in savings deposits remained relatively subdued at 6.5% qoq. On a daily average basis, saving account deposits grew by 21% yoy, while current account deposits increased by 7% yoy. Period-end CASA ratio improved sequentaily by almost 150bp to 40.5%. On a daily avergae basis, CASA ratio improved slightly to 36% compared to 35.7% in 1QFY2013. The bank has been focussing on building a stronger retail term deposits portfolio, as evident from the 38.5% yoy growth in this deposit franchise. As of 2QFY2013, retail term deposits constitute 40.3% ( 36.2% as of 2QFY2012) of total term deposits.

Exhibit 5: Average CASA growth moderates in 1QFY13

30 25 20 15 10 5 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13
Source: Company, Angel Research

Exhibit 6: Period-end CASA ratio improve sequentially

(%) 44.0 42.0 42.2

Reported yoy growth in average CASA balances (%) 24 20 16 13 16

41.6

41.5 39.1

40.5

40.0 38.0 36.0 34.0 32.0 30.0 2QFY12 3QFY12 4QFY12

1QFY13

2QFY13

Source: Company, Angel Research

NIMs improve sequentially on lower deposit costs

The banks overall reported NIM for the quarter improved by 9bp qoq to 3.46%, largely on account of a sequential decline in the cost of funds. The reduction of deposits rates undertaken by the bank, resulted in a sequential decline in the overall cost of funds by 16bp. The management has maintained its guidance of overall NIM for FY2013 to be in the range of 3.25-3.5%.

October 16, 2012

Axis Bank | 2QFY2013 Result Update

Exhibit 7: Cost of funds lower sequentially in 2QFY13...

(%) 6.5 5.5 4.5 3.5 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 6.19 6.34 6.45 6.70 6.54

Exhibit 8: ...leading to 9bp qoq improvement in NIMs

(%) 3.9 3.6 3.3 3.0 2.7 2.4 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3.78 3.75 3.55 3.37 3.46

Source: Company, Angel Research

Source: Company, Angel Research

Healthy growth in non-interest income excluding treasury, largely driven by strong growth in fee income from Retail and Agri & SME segments
The banks fee income grew at a healthy pace of 19.9% yoy during 2QFY2013, largely due to robust growth in fee income from segments such as agri & SME and retail. Growth in fee income of agri & SME and retail segments came in at 27.9% and 29.3% yoy, respectively which can be attributed to healthy loan book growth in these segments. Corporate based fee income also registered a growth of 16.9% yoy in 2QFY2013. Growth in fee income from the treasury segment came in healthy at 24.1% yoy. Trading profits came in at `207cr during the quarter as against `150cr in 1QFY2013. Trading profits largely comprised of gains in bonds/debentures (75cr), forex/derivatives (28cr) and equity (95cr - which included the proceeds of stake sale in Axis AMC). Overall, the non-interest income excluding trading profits registered a healthy growth of ~15% yoy during 2QFY2013.

Exhibit 9: Fee income grew at healthy pace on a yoy basis

Particulars (` cr) Fee Income Corporate Treasury Agri & SME Business banking Capital markets Retail Trading profit Others Other income Other income excl. Treasury
Source: Company, Angel Research

2QFY13 1,343 443 295 81 94 13 416 207 43 1,593 1,386

1QFY13 1,154 409 238 63 110 12 322 150 31 1,336 1,185

% chg (qoq) 16.4 8.4 24.1 27.9 (14.5) 11.9 29.3 38.0 37.4 19.3 16.9

2QFY12 1,121 379 274 64 98 15 291 28 87 1,235 1,207

% chg (yoy) 19.9 16.9 7.8 25.9 (4.1) (10.5) 43.1 650.1 (50.9) 29.0 14.8

October 16, 2012

Axis Bank | 2QFY2013 Result Update

NPA ratios remain stable as the bank provided aggressively for NPAs, despite witnessing higher slippages
During 2QFY2013, slippages for the bank came in at `628cr, which included the account of Deccan Chronicle. Slippages and restructuring taken together amounted to `2,000cr in 1HFY2013 and the management has guided for a similar number in 2HFY2013. The bank registered treasury gains of `207cr during the quarter and used the opportunity to provide aggressively by `407cr for NPAs and create a contingency reserve of `115cr. Along with this, recoveries and upgrades of `136cr helped the bank to keep its net NPA ratio at 0.33% (on an absolute basis, net NPAs increased by 8.2% qoq to `47cr), which was a positive surprise. Gross NPAs also remained in check at 1.1%, due to large write-offs. Write-offs during the quarter amounted to `529cr compared to `170cr written-off in 1QFY2013 and quarterly average of `322cr since 2QFY2011. The bank reversed provisions of `66cr (made on account of investment depreciation) during the quarter as against `70cr reversed in 4QFY2012. The banks PCR(provisioning coverage ratio) improved to 80.0% in 2QFY2013 from 79.0% in 1QFY2013. The banks cumulative restructured book, which is reported facility-wise, stood at `4,068cr as of 2QFY2013.

Exhibit 10: Slippages increase sequentially

(%) 1.60 1.20 0.80 0.40 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 1.39 1.50 1.44 1.07 1.48

Exhibit 11: NPA levels stable sequentially

Gross NPAs (%) 1.3 1.0 0.8 0.5 77.7 75.3 Net NPAs (%) 81.0 79.0 NPA coverage (%, RHS) 80.0 85.0 77.5 70.0 62.5

1.1 0.3

1.1 0.4

0.9 0.3

1.1 0.3

1.1 0.3
55.0 2QFY13 CIR (%, RHS) 47.0 44.4 44.0 41.0 2.4 38.0

0.3 -

2QFY12

3QFY12

4QFY12

1QFY13

Source: Company, Angel Research

Source: Company, Angel Research; Note: PCR including tech. write-offs

Exhibit 12: Network expansion continues steadily

Branches 2,000 1,600 1,200 7,594 8,324 9,924 ATMs (RHS) 10,337 10,297 12,500 10,000 7,500 5,000

Exhibit 13: Cost-to-income ratio moderates to 44.4%

Opex to avg. assets (%) 2.5 2.4 2.3 2.2 2.1 2.0 2.4 2.3 2.4 2.2 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13
Source: Company, Angel Research

45.2 42.3

45.4 44.1

1,446

1,493

1,622

1,665

1,741

800 400

2,500 -

2QFY12 3QFY12 4QFY12 1QFY13 2QFY13

Source: Company, Angel Research;

October 16, 2012

Axis Bank | 2QFY2013 Result Update

Investment arguments
Branch expansion to support faster market share gains
We believe Axis Banks reasonable capital adequacy positions it for market share gains with ~500bp higher growth than industry over FY201214. The bank has expanded its network at a 31.6% CAGR since FY200312, driving a four-fold increase in its CASA market share to 4.7% by FY2012. In our view, such gains will continue going forward as well, especially as network expansion (200-250 additions, about 1520% yoy) remains healthy.

Fee income continues to drive higher RoEs

Axis Banks fee income contribution across a spectrum of services has been a meaningful 1.9-2.0% of assets (almost twice the level in PSBs) over FY200912. Going forward, fee income growth is likely to at least mirror balance sheet growth. We have built in a CAGR of 13.4% over FY201214 in fee income, leading to a contribution of 1.9% of assets for FY2013 and 1.8% for FY2014.

Book-accretive dilution on the cards in the next 1218 months

Axis Bank's tier-I capital adequacy has dipped to 9.0% as of 2QFY2013 (9.9% including 1HFY2013 profits) from 11.2% in FY2010 due to strong credit growth. Going forward also, we expect the management to meet its guidance of above system average loan growth. This is likely to result in a need to raise capital in the next 1218 months, as per our calculations. (Axis Bank had last raised capital in 2QFY2010 when its tier-I CAR was 9.4%). The dilution is likely to be bookaccretive and will aid in further enhancing the bank's credit market share going forward.

Outlook and valuation

Axis Banks aggressive branch expansion (at a CAGR of ~30%) over FY200812 is expected to lead to further CASA market share gains for the bank. In FY2011, the bank added over 400 branches (an increase of 41.4% yoy), while in FY2012 the bank added 232 branches (an increase of 16.7% yoy). These branches are expected to contribute more meaningfully in FY2013 and FY2014 and aid in driving business and profitability growth for the bank. Axis Bank is trading at 1.6x FY2014E ABV 58% discount to HDFC Bank vs an average discount of 35% over past five years (which we believe over-discounts asset quality concerns). We remain positive on the bank, owing to its attractive CASA franchise, multiple sources of sustainable fee income and reasonable growth outlook. We maintain our Buy recommendation on the stock with a target price of `1,328.

October 16, 2012

Axis Bank | 2QFY2013 Result Update

Exhibit 14: Key assumptions

Particulars (%) Credit growth Deposit growth CASA ratio NIMs Other income growth Growth in staff expenses Growth in other expenses Slippages Coverage ratio
Source: Angel Research

Earlier estimates FY2013 20.0 21.0 39.7 3.1 9.3 20.0 10.0 1.5 78.6 FY2014 20.0 20.0 39.3 3.2 17.0 20.0 20.0 1.5 78.2

Revised estimates FY2013 20.0 21.0 39.7 3.1 14.2 18.0 13.5 1.4 74.4 FY2014 20.0 20.0 39.3 3.2 15.1 18.9 18.9 1.4 75.0

Exhibit 15: Change in estimates

FY2013 Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Angel Research

FY2014 Earlier estimates 11,564 6,935 18,500 8,176 10,324 1,634 8,690 2,819 5,871 Revised Var. (%) estimates 11,564 7,123 18,687 8,218 10,469 1,744 8,725 2,831 5,894 2.7 1.0 0.5 1.4 6.7 0.4 0.4 0.4

Earlier estimates 9,498 5,927 15,425 6,816 8,609 1,286 7,323 2,376 4,947

Revised Var. (%) estimates 9,498 6,188 15,686 6,912 8,774 1,392 7,382 2,395 4,987 4.4 1.7 1.4 1.9 8.3 0.8 0.8 0.8

Exhibit 16: Angel EPS forecast vs. consensus

Year (`) FY2013E FY2014E Angel forecast 116.8 138.0 Bloomberg consensus 116.5 137.7 Var. (%) 0.3 0.2

Source: Bloomberg, Angel Research

October 16, 2012

Axis Bank | 2QFY2013 Result Update

Exhibit 17: P/ABV band

2,400 2,000 1,600 1,200 800 400 0 Price (`) 0.8x 1.4x 2x 2.6x 3.2x

Oct-09

Feb-12

Nov-06

May-10

Aug-08

Dec-10

Source: Company, Angel Research

Exhibit 18: Discount to HDFC Bank (%)

-

Mar-09

Sep-07

Feb-08

Oct-09

Sep-12
Sep-12 Apr-12

Jun-07

Apr-06

Jan-08

Jul-11
Jun-11

May-09

(15.0) (30.0)
(%)

(45.0) (60.0) (75.0)

Source: Company, Angel Research

October 16, 2012

Nov-11

Dec-08

Apr-07

Mar-10

Aug-10

Jan-11

Jul-08

Axis Bank | 2QFY2013 Result Update

Exhibit 19: Recommendation summary

Company AxisBk FedBk HDFCBk ICICIBk* SIB YesBk AllBk AndhBk BOB BOI BOM CanBk CentBk CorpBk DenaBk IDBI# IndBk IOB J&KBk OBC PNB SBI* SynBk UcoBk UnionBk UtdBk VijBk Reco. Buy Neutral Neutral Buy Accumulate Buy Neutral Reduce Accumulate Accumulate Neutral Accumulate Neutral Accumulate Neutral Accumulate Neutral Accumulate Neutral Neutral Buy Accumulate Neutral Neutral Accumulate Buy Neutral CMP (`) 1,146 470 630 1,042 24 381 137 107 767 298 50 423 75 407 107 98 185 78 1,162 291 805 2,229 120 76 199 65 57 Tgt. price (`) 1,328 1,245 25 452 97 864 340 449 447 112 87 966 2,353 226 81 Upside (%) 15.9 19.5 7.4 18.4 (9.3) 12.7 14.3 6.2 9.8 14.4 11.0 20.0 5.6 13.7 23.9 FY2014E P/ABV (x) 1.6 1.1 3.5 1.7 1.0 1.9 0.5 0.7 0.9 0.7 0.6 0.8 0.7 0.7 0.7 0.6 0.7 0.5 1.0 0.6 0.8 1.4 0.7 0.8 0.7 0.5 0.7 FY2014E Tgt. P/ABV (x) 1.8 2.0 1.1 2.3 0.6 1.0 0.8 0.8 0.7 0.7 0.6 1.0 1.5 0.8 0.58 FY2014E P/E (x) 8.3 9.0 17.5 12.7 6.1 9.0 3.7 4.4 5.5 4.4 4.3 5.0 3.6 4.0 4.4 4.3 4.4 3.7 6.2 4.7 4.8 8.6 4.4 4.6 4.3 3.0 5.0
#

FY2011-14E EPS CAGR (%) 16.0 7.5 27.9 20.9 5.0 23.5 (0.4) 1.0 7.1 20.8 35.5 7.2 100.1 (2.2) 3.1 20.1 2.5 27.1 6.5 26.5 7.4 21.7 11.7 7.9 19.8 20.7 12.1

FY2014E RoA (%) 1.6 1.1 1.9 1.4 1.0 1.5 0.9 0.9 1.0 0.8 0.7 0.9 0.6 0.8 0.8 0.9 1.1 0.6 1.3 0.9 1.0 1.0 0.7 0.6 0.8 0.7 0.5

FY2014E RoE (%) 20.2 13.5 22.0 15.5 17.1 23.6 15.7 15.3 17.2 16.3 15.5 15.3 14.7 15.1 15.9 14.4 16.3 13.6 17.7 13.9 17.3 17.7 16.8 14.4 16.3 16.2 13.0

Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), Without adjusting for SASF

Company Background
Axis Bank is India's third-largest private sector bank after ICICI Bank and HDFC Bank. The bank was promoted by government institutions, led by UTI (SUUTI holds 23.5% stake currently, which will eventually be divested). The bank has an extensive network of 1,741 branches and 10,297 ATMs spread across 1,113 centers (~58% in metro and urban regions). The bank's strong growth has been backed by robust retail branch expansion, strong corporate relationships and a wide range of fee income products.

October 16, 2012

10

Axis Bank | 2QFY2013 Result Update

Income statement (Standalone)

Y/E March (` cr) Net Interest Income - YoY Growth (%) Other Income - YoY Growth (%) Operating Income - YoY Growth (%) Operating Expenses - YoY Growth (%) Pre - Provision Profit - YoY Growth (%) Prov. & Cont. - YoY Growth (%) Profit Before Tax - YoY Growth (%) Prov. for Taxation - as a % of PBT PAT - YoY Growth (%) FY08 2,585 65.0 1,795 77.7 4,381 70.0 2,155 77.4 2,226 63.4 579 58.2 1,646 65.3 575 35.0 1,071 62.5 FY09 3,686 42.6 2,834 57.8 6,520 48.8 2,858 32.6 3,662 64.5 877 51.3 2,785 69.2 970 34.8 1,815 69.5 FY10 5,004 35.8 3,946 39.2 37.3 3,710 29.8 5,241 43.1 1,389 58.5 3,851 38.3 1,337 34.7 2,515 38.5 FY11 6,563 31.1 4,632 17.4 25.1 4,779 28.8 6,416 22.4 1,280 (7.9) 5,136 33.3 1,747 34.0 3,388 34.8 FY12 8,018 22.2 5,420 17.0 13,438 20.0 6,007 25.7 7,431 15.8 1,143 (10.7) 6,288 22.4 2,046 32.5 4,242 25.2 FY13E 9,498 18.5 6,188 14.2 15,686 16.7 6,912 15.1 8,774 18.1 1,392 21.8 7,382 17.4 2,395 32.4 4,987 17.6 FY14E 11,564 21.8 7,123 15.1 18,687 19.1 8,218 18.9 10,469 19.3 1,744 25.3 8,725 18.2 2,831 32.4 5,894 18.2

8,950 11,195

Balance sheet (Standalone)

Y/E March (` cr) Share Capital Reserve & Surplus Deposits - Growth (%) Borrowings Tier 2 Capital Other Liab. & Prov. Total Liabilities Cash Balances Bank Balances Investments Advances - Growth (%) Fixed Assets Other Assets Total Assets - Growth (%) FY08 358 8,411 49.1 5,624 3,429 4,130 7,306 5,199 33,705 59,661 61.8 923 2,785 49.6 FY09 359 9,855 33.9 10,185 5,334 4,613 9,419 5,598 46,330 36.7 1,073 3,744 34.8 FY10 405 15,639 20.4 10,014 7,156 6,134 9,482 5,722 55,975 27.9 1,222 3,906 22.3 FY11 411 18,588 33.9 19,275 6,993 8,209 13,886 7,522 71,992 36.5 2,273 4,632 34.4 FY12 413 22,395 16.3 23,498 10,574 8,643 10,703 3,231 FY13E 427 26,527 21.0 28,139 10,310 10,324 11,985 3,869 FY14E 427 31,081 20.0 33,477 10,052 12,302 12,784 4,603

87,626 117,374 141,300 189,238 220,104 266,326 319,591

109,578 147,721 180,648 242,713 285,628 342,053 406,930

93,192 112,099 132,825 19.2 2,259 6,483 17.7 20.0 2,624 7,764 19.8 20.0 3,029 9,236 19.0

81,557 104,341 142,408 169,760 203,711 244,454

109,578 147,721 180,648 242,713 285,628 342,053 406,930

October 16, 2012

11

Axis Bank | 2QFY2013 Result Update

Ratio analysis (Standalone)

Y/E March Profitability ratios (%) NIMs Cost to Income Ratio RoA RoE B/S ratios (%) CASA Ratio Credit/Deposit Ratio CAR - Tier I Asset Quality (%) Gross NPAs Net NPAs Slippages Loan Loss Prov. /Avg. Assets Provision Coverage Per Share Data (`) EPS ABVPS (75% cover.) DPS Valuation Ratios PER (x) P/ABVPS (x) Dividend Yield DuPont Analysis NII (-) Prov. Exp. Adj. NII Treasury Int. Sens. Inc. Other Inc. Op. Inc. Opex PBT Taxes RoA Leverage RoE 2.8 0.6 2.2 0.2 2.4 1.7 4.2 2.4 1.8 0.6 1.2 15.0 17.6 2.9 0.7 2.2 0.2 2.4 2.0 4.4 2.2 2.2 0.8 1.4 13.6 19.1 3.0 0.8 2.2 0.4 2.7 2.0 4.6 2.3 2.3 0.8 1.5 12.5 19.2 3.1 0.6 2.5 0.2 2.7 2.0 4.7 2.3 2.4 0.8 1.6 12.1 19.3 3.0 0.4 2.6 0.0 2.6 2.0 4.7 2.3 2.4 0.8 1.6 12.6 20.3 3.0 0.4 2.6 0.1 2.7 1.9 4.6 2.2 2.4 0.8 1.6 12.6 20.0 3.1 0.5 2.6 0.1 2.7 1.8 4.5 2.2 2.3 0.8 1.6 12.8 20.2 38.3 4.7 0.5 22.7 4.1 0.9 18.5 2.9 1.0 13.9 2.5 1.2 11.2 2.1 1.4 9.8 1.8 2.0 8.3 1.6 2.4 29.9 241.6 6.0 50.6 281.6 10.0 62.1 393.8 12.0 82.5 462.5 14.0 102.7 551.5 16.0 116.8 630.9 23.0 138.0 737.9 27.0 0.8 0.4 1.0 0.4 49.8 1.1 0.4 1.5 0.6 63.6 1.3 0.4 2.2 0.8 68.2 1.1 0.3 1.4 0.5 74.3 1.1 0.3 1.3 0.3 73.8 1.2 0.3 1.4 0.4 74.4 1.4 0.3 1.4 0.4 75.0 45.7 68.1 13.7 10.2 43.1 69.5 13.7 9.3 46.7 73.8 15.8 11.2 41.1 75.3 12.7 9.4 41.5 77.1 13.7 9.4 39.7 76.5 12.9 9.4 39.3 76.5 12.2 9.3 2.9 49.2 1.2 17.6 3.0 43.8 1.4 19.1 3.1 41.4 1.5 19.2 3.2 42.7 1.6 19.3 3.1 44.7 1.6 20.3 3.1 44.1 1.6 20.0 3.2 44.0 1.6 20.2 FY08 FY09 FY10 FY11 FY12 FY13E FY14E

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Axis Bank | 2QFY2013 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Axis Bank No Yes No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

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