A “good deal, at a good price”) agreement by Macquarie Securities analyst Suresh Ganapathy for Axis Bank’s purchase of Citibank’s retail business in India for $1.6 billion. Has been given. Citibank on March 30 last year had announced its intention to sell its domestic consumer business. He said he would sell the business to an Indian private sector bank after a drawn-out bidding process.
As a part of this deal, Axis Bank will get attractive credit card customers of Citi and its approximately 3,600 employees. However, Citi will continue to serve its institutional clients in the country. Axis Bank said the transaction may take 9-12 months to complete, depending on regulatory approvals.
Ganapathi has given a ‘neutral’ rating on the stock and has set a price target of Rs 790 on Axis Bank, adding that the deal should be favorable for the private bank’s return on investment as well as margins.
Axis Bank will buy consumer business of CITI Group, know how to earn from stocks from leading brokerages
“If you get a higher yielding portfolio on your books, it can be a margin booster,” Ganapathi told CNBC-TV18 in an interview.
Analysts in the financial services sector believe that the upside for Axis Bank stock depends on the ability to improve margins and return on equity trajectory.
At 11:27 am on the National Stock Exchange, the shares of Axis Bank were trading at Rs 758 with a gain of 1 per cent.
In a note to the deal, Jefferies said: “Management views the acquisition in CY24 (approximately FY25) as breakeven; This means that till then it may see limited upside with potential capital raising in 12-15 months. We maintain our buy rating on this stock with a target price of 1,040.”
According to an Ambit analyst, Citi’s acquisition of India’s retail business will strengthen Axis’ competitive position as its customers come from the affluent. Hence Axis Bank is our top pick among private banks with a target price of Rs 997.
Axis Bank shares rise 2% on acquisition of Citigroup’s Indian banking business
PhillipCapital has a Bullish Opinion on Axis Bank saying “The Bank’s ability to improve sustainable margins is critical for further rerating. We believe that the return ratio will improve due to lower credit cost.”
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