MUMBAI: Prabhudas Lilladher has maintained its Accumulate rating on Axis Bank with a target price of Rs 1,150.

A report released on January 15 said: "Axis Bank has reported Q3FY10 PAT of Rs6.56bn, up by 31% YoY, higher than our as well as market expectations. Margins threw positive surprise by being sequentially up by 50bps to 4%. We believe ~10bps of improvement in margins could be due to recent capital infusion; CASA ratio up 280bps QoQ to 45.6%, fee income up by healthy 29.2% YoY and 11.2% QoQ (driven by robust growth in corporate banking, retail banking and treasury segments), stable asset quality remain the key positives. Delinquencies have moderated but need to monitor another quarter to decisively conclude a peak out in the same. The GNPAs were up by 3.7% QoQ to Rs11.7bn and the coverage remains largely stable. With technically written-off accounts, the coverage improves to 69%. Restructuring during the quarter too came down significantly to Rs0.9bn v/s Rs3.9bn in Q2FY10. Cumulative value of restructured assets stood at Rs23.1bn or 2.43% of gross customer assets.

"Advances grew by 12.5% YoY and 4.6% QoQ. CASA deposits grew by 4.9% QoQ, while the overall deposits shrunk by 1.5% QoQ. Consequently, the NIM expanded by 50bps QoQ leading to 17.3% QoQ and 45.1% YoY NII growth.

"Advances growth muted: Advances growth remained muted at 12.5% YoY. We expect Axis Bank to close the year with 16.7% advances growth, which implies a sequential advances growth of 12.2% in Q4FY10. 

"There has been a marked slowdown in Axis Bank's business growth in the recent past but we expect growth to pick up. The stock is currently trading at a significant discount to its larger peers. We expect Axis Bank to deliver earnings CAGR of ~27% through FY10-12E. At the CMP, the stock trades at 13.6x its FY11E EPS, 2.3x FY11E BV and 2.4x FY11E ABV. We continue to favour Axis bank from a medium-to-long term perspective. Maintain our Accumulate rating with a revised price target of Rs 1,150."