India New Gen Private Banks
Known risk is better – Prefer ICICI Bank over Axis Bank
Based on data available on the recognition of stress in various sectors, ICICI Bank seems to have recognized far more stress than Axis Bank. This, together with the fact that Axis is now trading at a 97% premium over ICICI bank after adjusting for subsidiary valuations, makes us believe that the risks surrounding asset quality and balance sheet for Axis Bank have not been fully considered by the market. We upgrade ICICI Bank to Buy and downgrade Axis to Hold.