See 25% upside in Axis Bank, buy now: Angel Broking

Jan 21, 2014, 06.22 PM IST

Even in absolute terms at 1.3 price to book in fundamental terms, the valuations of Axis Bank look attractive, says Vaibhav Agrawal, VP - Research - Banking, Angel Broking.

Tags Axis Bank, ICICI Bank, SUUTI, Vaibhav Agrawal, Angel Broking

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Even in absolute terms at 1.3 price to book in fundamental terms, the valuations of Axis Bank look attractive, says Vaibhav Agrawal, VP - Research - Banking, Angel Broking.

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See 25% upside in Axis Bank, buy now: Angel Broking

Even in absolute terms at 1.3 price to book in fundamental terms, the valuations of Axis Bank look attractive, says Vaibhav Agrawal, VP - Research - Banking, Angel Broking.

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In an interview to CNBC-TV18 Vaibhav Agrawal, VP - Research - Banking, Angel Broking shared his views on Axis Bank , which has been on investors' radar for the last few trading sessions on newsflow that the government will offload some of its SUUTI stake in India's third largest private sector bank . He also shared his outlook on other private sector banks.

Below is the edited transcript of Vaibhav Agrawal's interview with CNBC-TV18

Q: This overhang has been there for the last 10 days or so, how much of it you think has played out and now what would you do with Axis Bank?

A: The news has been out for some time. The stock has already underperformed. Right now it is trading at a discount even to ICICI Bank of almost 15 percent, which looks a little unwarranted. This move could be attributable to this news itself because the stake sale does amount to pretty large amount of supply coming into the market of the stock. Even in absolute terms at 1.3 price to book in fundamental terms the valuations do look kind of interesting. From a medium-term perspective, this would be hinging on a revival in the economy, with Axis being more cyclical than some of the other private banks like HDFC.

Q: Would you advice a buy here?

A: We do have a buy on Axis Bank. Because of the recent underperformance, the upside has expanded to close to 25 percent plus. However, one needs to have about 12-18 month perspective on this stock. If you are banking on ultimate revival in the economy that is when this stock would definitely give even 25 percent above returns in our view because at 1.3 times and with the kind of structural strength and the overall growth potential it is a great stock at these valuations.

Q: What are your other buys in this sector?

A: We do like private banks in general. Even ICICI Bank is a buy at 1.5 price to book even though little more expensive than Axis but even that is a good buy for us. We have recently even upgraded Yes Bank because at least the liquidity environment has improved and the banks own numbers continues to be quite good in recent quarters.

Harmonis Hubungan