Axis Bank share price targets: What analysts say post Rs 5,728 crore loss

Axis Bank's March quarter loss was a one-off due to Citi portfolio acquisition-related harmonisation and in-line with Street expectations. But excluding Citi integration, a few metrics missed analyst estimates slightly. The pre-provision operating profit (PPoP) miss was led by a miss on net interest income (NII) while margins moderated, albiet slightly.

Post its quarterly results, Morgan Stanley has a price target of Rs 1,200 on the stock, Jefferies finds it worth Rs 1,150 while Macquarie sees the stock at Rs 940. That said, most price targets for the stock stood in Rs 1,050-1,100 range.

With asset quality issues now behind and the merger consummated, analysts largely believe the focus should now shift to the bank's core performance.

Emkay Global said Axis Bank delivered healthy credit growth (ex-Citi) at 16 per cent YoY but lower loan yields and higher cost of funding led to a slight contraction in net interest margin, which stood at 4.2 oer cent. This coupled with higher opex led to a slight miss on core profitability, Emkay Global said but it added that LLP led to a beat on net profit (ex-Citi one-off).

"After a sharp dip in RoA to a low of 0.8 per cent due to the hit on Citi's portfolio acquisition in FY23, we expect the bank to report 1.8 per cent RoA and 18 per cent RoE (inflated due to Citi's acquisition goodwill w-off) on a merged basis (without factoring any equity dilution) over FY24-26E, owing to better growth and moderation in operational cost," Emkay said while revising its target to Rs 1,225 on the stock.

Axis Bank Q4 results: Loss at Rs 5,728 crore; private bank announces Re 1 dividend

Nuvama Institutional Equities, which has a target of Rs 1,100 on the stock, said Axis Bank's missed NII consensus by 3 per cent, but was quick to note that the consensus was for standalone NII while reported NII was consolidated and took into account Citi acquisition for one month.

"We reckon the like-to-like miss is higher at 5 per cent. Reported (consolidated) NII growth is soft at 2.5 per cent QoQ while we calculate standalone NII grew even slower at 1 per cent QoQ because of lower yield on loans. Despite strong growth in retail and higher EBLR, standalone yield is flat QoQ, which is negative. Pressure on NII and opex is offset by lower credit cost and higher fees," it said.

Motilal Oswal Securities said Axis Bank delivered a stable performance, with earnings being driven by lower provisions and higher fee income, even as margin remained range-bound. Asset quality, it said, continued to improve with moderation in slippages and healthy trends in recoveries and upgrades.

"The restructured book was controlled, which coupled with a higher provisioning buffer provided comfort on credit cost. We tweak our estimates slightly and expect Axis Bank to deliver an RoA/RoE of 1.9 per cent/18.1 per cent in FY25. Reiterate BUY with a target price of Rs 1,100 (premised on 1.8 times September 2024E BV)," Motial Oswal said.

Nirmal Bang Institutional Equities expects return ratios to moderate going forward on account of margin moderation, higher opex and credit cost normalisation going forward. It expects the bank to report RoA of 1.6 per cent and ROE of 16.3 per cent by FY25E. The brokerage has revised target price to Rs 1,025 on the stock.

Antique Stock Broking has cut its earnings estimates for Axis Bank by 2-3 per but has increased its target on the stock to Rs 1,050 from Rs 1,050 from Rs 1,025 earlier, as it rolled forward its estimates to FY25 from 1HFY25.

ICICI Securities, which has a target of Rs 1,050 on the stock said it values the stock at 1.8 times FY25E adjusted book value, in line with long-term average trading multiple. This brokerage has assigned Rs 74 per share vaue for its subsidiaries.

"The bank has acquired one of the best premium retail franchises in India and strong execution here should bear healthy rewards in the form of healthy NIMs, better fee and step-up in RoE FY25 onwards. While Axis Bank has reasonable CET 1 at 14% and strong internal accrual, we believe it could look to raise capital, which should propel even stronger growth," it said.

Phillip Capital said the Q4FY23 performance was marginally below its expectation but organic loan growth and asset quality surprised it positively.

"The tailwind of loan pricing will fade away as deposit repricing follows. But the bank has recalibrated growth in corporate segment and expanded the unsecured retail loan and commercial segment, thus providing some margin cushion. Opex will weigh on the operating performance throughout current fiscal. However, we foresee gradual improvement in risk adjusted return for the bank, which would warrant re-rating for the bank in medium term," it said.

This bank has suggested a target of Rs 1,050 on the stock.

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