Axis Bank, UltraTech Cement, Karur Vysya Bank, Tanla Plarforms Q3 Results Review: HDFC Securities
Axis Bank delivered a beat, led by better margins, strong fee income traction.
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HDFC Securities Institutional Equities
Axis Bank Ltd. - Retail Slippages Inching Up; Call For Prudent Provisions
Axis Bank delivered a beat, led by better margins (4.3%) and strong fee income traction (up 18% QoQ), partly offset by a one-off impairment recognition in the corporate book, which called for higher credit costs (81 basis points annualised). The bank witnessed higher net slippages (100 bps), especially from the retail portfolio (up 40bps QoQ). Axis Bank delivered further improvement in net interest margins (up 30 bps QoQ), albeit on the back of continued sub-par retail deposit growth; however, we argue that the current loan-to-deposit ratio (nine months-FY23: 90%) appears untenable.
UltraTech Cement Ltd. - Strong Volume Growth, A Healthy Margin
We continue to like UltraTech Cement for its strong growth and margin outlook and balance sheet management. The company delivered strong 12% YoY volume growth, led by healthy demand and higher non-trade sales. Unit Ebitda recovered a modest ~Rs 100/million tonne QoQ, mainly on operating leverage gains to Rs 903 per million tonne, amid flattish net sales realisation and deferment of fuel cost savings. UltraTech Cement believes its fuel cost has peaked out, and cost should reduce from Q4 FY23 onwards, buoying margin. The capex program remains on track.
Karur Vysya Bank Ltd. - Focused Efforts On Deposit Mobilisation
Karur Vysya Bank delivered a strong beat on our estimates, led by NIM reflation (up 25 bps) and healthy fee income, partly offset by higher credit costs (2.5% annualised). Gross non-performing asset declined sharply for a second straight quarter to 2.7% (330 bps reduction FYTD), led by net negative slippages and accelerated corporate write-offs.
Tanla Platforms Ltd. - Margin Recovery; Wisely Gaining Traction
Tanla reported lower-than-expected revenue growth while the margin recovery was better than the estimate. The enterprise business growth was muted (up 2% QoQ) in a seasonally strong quarter due to lower promotional messages and continued drag in one large account. The platform business growth of 4.1% QoQ was led by wisely OTT and communicate platform, offset by lower Trubloq volume (distributed ledger technology platform).
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