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Research Report Detail
|Report Date||Call||Price@Call||Target Price
|Current Status||Time Horizon|
|Open|| Long (1Y)
Nomura maintains buy on Axis Bank
Axis Bank disclosed its exposure towards the second list of accounts, where RBI has asked banks to initiate a debt resolution process. In Jun-17, RBI identified 12 large stressed accounts for debt resolution. More recently, RBI sent the second list (26-40 accounts) to the banks to initiate a debt resolution process: 60% of the total exposure is NPA for the system in these accounts. As per the disclosure, Axis Bank has exposure of INR25bn (funded non-funded) towards these accounts. While the total exposure is lower compared with the INR53bn in the first set of accounts, the important thing is that the provision cover here is lower at 35% vs the 47% provision cover it had for the first list of accounts being referred to NCLT. This would mean Axis will need to provide another INR9bn in addition to INR21bn for the NCLT accounts (first list). Total provisioning requirement towards these accounts of INR30bn implies 37% of our total provisions estimate for FY18F.