TOPIC: Fundamental and Technical Analysis of Axis bank Ltd

VISVESVARAYA TECHNOLOGICAL UNIVERSITY,

JNANASANGAMA, BELGAVI-590018

DEPARTMENT OF MANAGEMENT STUDIES

III Semester
22MBAFM304: SECURITY ANALYSIS AND PORTFOLIO
MANAGEMENT

Submitted By:

Nandhan M-1DT22BA027

Under the Guidance of:

Dr. Praveen Kumar Sinha
Associate Professor, MBA, DSATM

DEPARTMENT OF MANAGEMENT STUDIES

DAYANANDA SAGAR ACADEMY OF TECHNOLOGY & MANAGEMENT
UDAYAPURA, KANAKAPURA ROAD, BANGALORE-560082
ABOUT COMPANY
India’s third-largest private sector bank in terms of total assets, our wide network reaches
over a billion Indians, covering every major region in the country, including the hinterlands.
With One Axis, we offer the entire spectrum of financial services to varied customer
segments. We have empowered people and used technology to deliver delight to our
customers all over India and reached a strong financial position.

Subsidiary Operations
The bank operates many business divisions through its subsidiaries:-

1. Axis Finance Ltd - It is a NBFC through which the Bank provides wholesale and
retail lending solutions to corporate and retail consumers respectively, across
geographies and businesses.

2. Axis Capital Ltd - It provides services relating to investment banking, equity capital
markets, institutional stock broking, mergers and acquisition advisory etc. It completed
44 ECM transactions in fiscal 2022, including 27 IPOs, 8 QIPs, 2 OFS and 2 Rights
Issue. It has maintained market leadership in the Equity Capital Market with a 10%+
market share.

3. A.Treds Ltd (67% shareholding) It is engaged in the business of facilitating

financing of trade receivables. It is one of the three entities allowed by RBI to set
up the Trade Receivables Discounting System (TReDS), an electronic platform
for facilitating cash flows for MSMEs. Its digital invoice discounting platform
‘Invoicemart’ has set a new benchmark by facilitating financing of MSME invoices of ₹
27,000 crs+. As of Q3 FY21, it had a market share of 37%.

4. Axis Asset Management Co. Ltd (75% shareholding) - It undertakes the activities
of managing the mutual fund business. It had an average AUM of ~2,59,800 crores in
FY22.

5. Axis Trustee Services Ltd - It is registered with the SEBI and has been
successfully executing various trusteeship activities including debenture trustee,
security trustee, security agent, lenders’ agent, trustee for securitisation and escrow
agent, among others.

6. Axis Securities Ltd - It is in the business of retail broking services. It has a

customer base of 4.17 Mn.

7. Freecharge - It is in the business of providing merchant acquiring services, payment

aggregation services, payment support services, and business correspondent to a
Bank / Financial Institution, distribution of Mutual Funds. It has a base of 3 Mn.+
monthly unique active customers.
Acquisition - In 2017, The bank acquired freecharge from Snapdeal in an all cash
transaction of 385 crores.
8. Axis Mutual Fund Trustee Ltd (75% shareholding) - It acts as the trustee for the
mutual fund business.

9. Axis Bank UK Ltd - It is the banking subsidiary of the Bank in the UK and
undertakes the activities of banking. The Bank has entered into a Share Purchase
Agreement on 31 March, 2021 for sale of 100% stake in its subsidiary, Axis Bank UK
Limited to OpenPayd Holdings Ltd., and this transaction is subject to approval by the
concerned UK authorities

Fundamental Analysis of Stocks

 Fundamental analysis is a form of stock analysis that relies on key business metrics, such
as earnings, revenue, and cash flow. The aim is to calculate the “fair value” of a company
and its shares. To determine this, investment professionals examine numerous stock
indicators as part of the analysis.
We will investigate these in a later section.

 Fundamental analysis studies the business at a fundamental level to judge its financial

health. It examines the key ratios of a business to determine if the stock’s current price is

undervalued or overvalued. It also projects the company’s health and growth prospects.

For an investor, fundamental analysis is necessary. It helps him or her determine a

company’s worth. Fundamental analysis takes the following components into account:

 1. Company’s financial reports

2. Effectiveness of the management

3. Asset management

4. Demand for the product

5. Company’s press releases

6. Global industry review

7. Trade agreements

8. External policies of the government

 9. News releases

10. Competitor analysis

Fundamental analysis tools

1. Earnings per share or EPS

EPS is the amount of profit that is assigned to each stock of the company. It is calculated
by dividing the total revenues or gain of the company by the total number of outstanding
shares. To put it in a formula:

EPS = Net income of the company after tax / total outstanding shares

As EPS is a symbol of the health of the company, a higher EPS means higher returns for
the investor.

2. Price-to-earnings (P/E) ratio

P/E is one of the essential tools of fundamental stock analysis. It reflects the company’s
payouts as compared to its stock price. With this, you can know if the share of stock pays
wells for the price you pay. P/E ratio can be calculated by dividing the share price by the
EPS.

3. Return on equity

Return on Equity or ROE shows the efficiency of a company to generate profits on its

shareholder’s investment. It is calculated by dividing net earnings after tax by

shareholders’ equity. A higher ROE signifies a more efficient company. It means the

company can increase its profitability without any additional capital. An ROE within the

range of 13 to 15 is considered good.

4. Price-to-book (P/B) ratio

Also known as “stockholders equity”, the price to book ratio is the comparison of a stock’s book
value to its market value. Book value is the cost of each asset minus its cumulative depreciation.
The P/B ratio can be calculated by dividing the last closing price by the previous quarter’s book
value per share. It tells us what the company will be left with if it repays all its liabilities and
liquidates its assets. If the P/B ratio is less than one, then the stock is undervalued. If the rate is
more than one, then the stock is overvalued.

5. Beta

The Beta is the correlation of the stock price with its industry. You can calculate the Beta by
comparing the stock to the benchmark index. The Beta mostly oscillates between -1 and 1.

6. Price-to-sales ratio

Price-to-sales ratio compares a company’s stock price with its revenue. You can calculate the P/S
ratio by dividing market capitalisation by income or using the formula:

P/S ratio = Per share stock price/Per share revenue. A lower P/S ratio indicates undervaluation,
while anything above average suggests overvaluation.

7. Dividend payout ratio

A dividend payout ratio tells us how much the company has earned and what portion of it is being
given out as a dividend. It can be calculated by dividing the total amount of dividend by the net
income of the company.

8. Dividend yield ratio

Dividend yield ratio is what the company pays to its shareholders as a dividend relative to its
share price. Expressed in percentage terms, the dividend yield ratio can be calculated by dividing
the annual dividend of stock by the current share price.

9. Projected earnings growth

Projected earnings growth indicates how much you must pay for each unit of future growth of
earnings of the company. It is calculated by dividing the P/E ratio by projected growth in
revenues. A lower projected earnings growth indicates a lesser amount to be paid for each unit of
future earnings growth.
 The key ratios to be considered to analysis the stock are as follows:

Market capital ₹ 3,38,390 cr.

₹ 1,097
Current price

High/Low ₹ 1,152/814

Stock P/E 13.1

Book value ₹ 422

ROCE 12%

Dividend Yield 0.09%

ROE 8.73%

Face Value ₹ 2.00

₹ 775
Intrinsic Value

EPS ₹ 43.5

Debt ₹ 11,52,038 Cr.

Debt to Equity 0.46

Industry PE 13.0

Sales ₹ 1,07,158 Cr

Net Profit ₹ 13,529 Cr.

Int Coverage 1.60

PROS

 Company is expected to give good quarter

 Company has delivered good profit growth of 91.9% CAGR over last 5 years
 Company's working capital requirements have reduced from 86.0 days to 22.8
days

CONS

 Stock is trading at 2.60 times its book value

 Company has low interest coverage ratio.
 Promoter holding is low: 8.20%
 Company has a low return on equity of 9.74% over last 3 years.
 Contingent liabilities of Rs.15,11,843 Cr.
 Company might be capitalizing the interest cost
 Promoter holding has decreased over last 3 years: -5.73%


From the above ratios we analyse that Axis Bank is good at fundamentals so the investor can
invest in this stock for long term as the intrinsic value very good and PE ratio of the stock in
below the industry standard. The EPS and net profit are good. But the Debt is more which the
investor should consider while investing in this stock as the risk will be high.
Technical Analysis

Indicators Used In Technical Analysis

 Rate of change

 Relative Strength Index (RSI)

 Moving Average
Conclusion

Fundamental Analysis and Technical Analysis is basic tools which helps the investors to analyse
the stocks to invest to optimize their returns with minimum risk. With the help of the these tools
the investors can go through each and every detail about the stock market with the economic,
industry and competitive analysis and through the technical charts to predict the future
movements of the stock market and make wise decisions about their investments.

Bibliography

 www.moneycontrol.com

 www.screener.com

 www.Tradingview.com