Brokerage firm Morgan Stanley has given an 'overweight' rating to Axis Bank for a target Rs 1,200 per share. The brokerage said that management expects likely completion of Citi acquisition by March 1 this year. It is positive on a structural turnaround of franchise and expect return on equities (RoEs) to be more than 16 percent by FY24/FY25. The valuation is expected at 1.5x and FY24 book appears attractive, the firm said.
An overweight rating on a firm usually means that it deserves a higher weighting than the benchmark's current weighting for that stock.
Axis Bank has recently informed the stock exchanges that the deal to acquire Citibank India’s consumer business and NBFC business of Citicorp is expected to be completed by March 1.
“We now wish to inform that both parties have made progress on integration and have obtained other requisite customer consents and approvals, as applicable. Based on the progress made till date, we estimate a reasonable possibility of completion of the acquisition by March 1, 2023, which is within the timeline of 12 months indicated earlier by us…” Axis Bank said in a filing.
All the customers, employees and assets of Citi will be transferred to Axis by March 1, and the Indian lender will pay the consideration for the acquisition which is Rs 12,325 crore.
Axis Bank will receive interest earning advances portfolio of Rs 27,400 crore, including credit cards, mortgage, personal loans, asset-backed finance and small business banking.
In another development, the bank has successfully enabled cross-border transactions in real-time via the UPI network. This initiative is a part of the joint initiative between the Reserve Bank of India (RBI) and the Monetary Authority of Singapore (MAS) to develop cross-border payments between India and Singapore.
The Unified Payments Interface (UPI) of India and PayNow of Singapore will be linked to enable the faster and cost-efficient transfer of cross-border remittances.
At the time of writing this report, the shares of Axis Bank was trading 5.05 points or 0.60 percent up at Rs 850.20 apiece on the BSE.
First Published: Feb 24, 2023 11:25 AM IST
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