Axis Bank –Buy- Angel Securities
Axis Bank is exploring options to monetize its 4,200 automatic teller machines (ATMs). For an upfront payment, the bank may allow a third-party service provider to collect interchange fees from other banks to let customers use Axis Bank’s ATMs.
Thus, the bank will be able to move its ATM assets off its balance sheet and outsource the entire network’s management to service providers, paying them on a per-transaction basis. Request-for-proposals seeking solutions on how this can be accomplished have already been sent to 8–10 vendors, including Wincor-Diebold, Prizm Payment Services, AGS Infotech and NCR, as per reports.
Recently, the bank also entered into an agreement with Prizm Payment Services and AGS Infotech to set up and manage 5,000 ATMs on a purely variable model, enabling the bank to increase its ATM count to more than 9,000 within the next 18 months. At the CMP, the stock is currently trading at 2.4x FY2012E ABV. We maintain a BUY rating on the stock with a target price of Rs1,466.
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