CLSA raised its price target to ₹1,100 from ₹1,050, stressing that the lender is its top choice among funds. The revised price target implies a 37% upside over the stock’s Thursday close of ₹802.25.

The brokerage said that while the process of acquiring Citibank’s consumer businesses in India will be ‘difficult’, its current valuations are ‘not appropriate’.

“The acquisition of Citibank’s India business may be difficult from a customer retention perspective,” CLSA analysts said in a note to clients on October 13. “While the capital increase remains, we anticipate that Citi’s retail business would contribute 3-4% only FY24 consolidated revenue and impact from customer retention will be only 2-3% on revenue.”

The brokerage said the lender’s 1.5 times September 2024 estimated Price-to-Book (PB) ratio is neutral and offers the best risk reward in the sector.

Axis shares have gained 15.6% since January compared with 8.9% earlier in the Nifty Bank index. Shares of ICICI Bank, currently a favorite on Dalal Street, have risen 11.7% during this period. “On a volume basis, the valuation premium for Axis bank at 60-65% is too high for the 1-1.5% ROE differential, in our view,” said CLSA. “While Axis’ liability coverage remains inferior to ICICI’s, Axis has matched ICICI’s on risk metrics and asset-side optimization.”

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