DCF Studio

    AXISBANK.NS · NSI · Financial Services

    Axis Bank Limited

    Also onConsensus Drift

    Implied value per share

    INR 821.19

    Market price

    INR 1257.00

    Implied upside

    -34.7%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    AdjustedReported capital expenditure averages 2.68% of revenue against depreciation of 6.78%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 6.78% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.
    NoteRisk-free rate is an assumption: INR assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    INR 821.19-34.7%
    Exit multiple
    INR 2230.61+77.5%
    Market price
    INR 1257.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (INR). Outflows negative.

    0bn146bn292bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayINR
    LineFY27FY28FY29FY30FY31CAGR
    RevenueINR 987.8bnINR 1107.9bnINR 1242.6bnINR 1393.7bnINR 1563.2bn+12.2%
    EBITINR 384.7bnINR 431.5bnINR 484.0bnINR 542.8bnINR 608.9bn+12.2%
    NOPATINR 291.8bnINR 327.2bnINR 367.0bnINR 411.7bnINR 461.7bn+12.2%
    Add depreciation & amortisationINR 66.9bnINR 75.1bnINR 84.2bnINR 94.5bnINR 105.9bn+12.2%
    Less capital expenditureINR -66.9bnINR -75.1bnINR -84.2bnINR -94.5bnINR -105.9bn+12.2%
    Less increase in working capitalINR -107.1bnINR -120.1bnINR -134.7bnINR -151.1bnINR -169.5bn+12.2%
    Free cashflow to firmINR 184.7bnINR 207.1bnINR 232.3bnINR 260.5bnINR 292.2bn+12.2%
    Discount factor0.95520.87160.79530.72560.6621-
    Present valueINR 176.4bnINR 180.5bnINR 184.7bnINR 189.1bnINR 193.5bn+2.3%
    Present Value Of The ForecastINR 924.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate6.80%INR assumption - no free live source available for this market (assumption)
    Equity risk premium8.00%Market assumption
    Beta0.611Reported 0.420, pulled toward 1.0 (Blume)
    Cost of equity11.69%Risk-free + beta x equity risk premium
    Cost of debt8.80%Implied cost of debt of 29.6% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationINR 3913.7bn58.2% of capital
    Total debtINR 2805.1bn41.8% of capital, book value as a proxy
    Tax rate24.2%Effective, capped at statutory
    WACC9.60%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareINR 821.19

    78% of EV

    Forecast FCFF, final year
    INR 292.2bn
    Capex at depreciation, working capital in reinvestment
    INR 461.7bn
    Less reinvestment at g/ROIC (26.1% of NOPAT)
    INR -120.3bn
    Capitalised
    INR 341.4bn
    ROIC (WACC floor)
    9.6%
    Terminal value, undiscounted
    INR 4931.7bn
    Terminal value, discounted
    INR 3265.3bn
    Enterprise value
    INR 4189.4bn
    Less net debt
    INR 1624.7bn
    Equity value
    INR 2564.8bn

    Exit at 16.2x EBITDA

    Value per shareINR 2230.61

    89% of EV

    Terminal value, undiscounted
    INR 11580.2bn
    Terminal value, discounted
    INR 7667.2bn
    Enterprise value
    INR 8591.3bn
    Less net debt
    INR 1624.7bn
    Equity value
    INR 6966.6bn

    Spread between methods: 92%.

    Sensitivity

    Value per share (INR) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.60%1210.901217.901224.901231.901238.90
    8.60%987.11993.05998.981004.911010.85
    9.60%811.00816.10821.20826.30831.40
    10.60%669.00673.44677.87682.30686.74
    11.60%552.26556.15560.04563.93567.82

    Outlined: this model. Green text: above today's price of 1257.00. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year12.2%21.1%+8.9pp
    EBIT margin38.9%50.2%+11.2pp
    Discount rate9.6%7.5%-2.1pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.