Shares of Axis Bank have slipped 8.65 per cent so far this year. The private lender reported a loss of Rs 5,728 crore for the three months that ended March 31, 2023, compared to a profit of Rs 4,118 crore a year earlier. The huge loss came in on account of a one-time loss of Rs 12,500 crore in Q4 FY23 due to the acquisition of Citigroup Inc's consumer and non-banking finance businesses. Despite the loss, the lender's business growth remained robust. It posted a standalone operating profit, which excludes provisions and contingencies, of Rs 9,168 crore as against Rs 6,466 crore a year earlier.
Three brokerages gave a 'Buy' rating for the stock. YES Securities has recommended a target price of Rs 1,300 over a one-year period, suggesting an upside potential of 51.16 per cent.
"Gross slippages amounted to Rs 3,375 crore (annualised slippage ratio of 1.80 per cent) and recoveries and upgrades were healthy at Rs 2,699 crore. NIM (Net interest margin) at 4.22 per cent was down on a reported basis but was up 1 basis point on like-for-like basis," the brokerage noted.
"The lender's advances, total opex and fee income recorded a growth. Management stated that Axis Bank can grow 400-600 basis points (bps) higher than the banking system. The projection for credit growth (presumably for the system) is 12-13 per cent. Earlier, growth had slowed for the bank since it was not comfortable doing low-yielding corporate and mortgage lending at the time," the brokerage said.
Prabhudas Lilladher has upwardly revised its target price to Rs 1,140 from Rs 1,100 earlier.
"Axis Bank saw a mixed quarter; core PPoP (Pre-provision operating profit) at Rs 9,080 crore missed our estimates by 1.80 per cent due to lower NII (Net interest income), although core PAT (Profit after tax) beat estimates by 16 per cent as provisions dropped sharply quarter-on-quarter (QoQ) led by improving asset quality," PL stated.
JM Financial Institutional Securities has given a 12-month target price of Rs 1,075 on the counter.
"In our view, transformation is in the right direction with sustaining loan growth momentum, improvement in liabilities profile, robust asset quality resulting in low credit costs and steadily improving return profile. Delivery on the loan growth momentum and sustenance of NIMs will be critical factors that can drive the rerating for the stock. Current core valuations of 1.5x FY25E BVPS (Book Value Per Share) are inexpensive and we expect the discount to larger private sector peers to narrow as Axis Bank starts reporting strong operating performance on a more sustainable basis," JM Financial stated.
Axis Bank settled 2.39 per cent lower at Rs 860 during the previous session on Friday. At Friday's closing price, the scrip has fallen 11.38 per cent to hit its 52-week high of Rs 970.45, hit on January 4, 2023. That said, Axis Bank's stock has gained 39.14 per cent from its one-year low of Rs 618.10, a level seen on June 23 last year.
Meanwhile, Indian equity benchmarks were closed on Monday due to Maharashtra Day. In the previous session, the domestic benchmarks extended their gains for the seventh straight session. The 30-share benchmark Sensex pack surged 463 points, or 0.76 per cent, to settle at 61,112 on Friday, while the broader NSE Nifty index closed 150 points, or 0.84 per cent, up at 18,065. The domestic indices would resume trading today.