Macquarie took a neutral view underscoring that deposits remain a key monitorable for this brokerage.
The stock today opened with gains of 1.3% and hit the day’s high of Rs 967.90 despite Nifty and Bank Nifty trading in deep red.
Private lender Axis Bank posted 10% year-on-year (YoY) growth in its standalone net profit at Rs 5,863 crore in the July-September period, which is also higher than the ET NOW poll estimate of Rs 5,800 crore. Net interest income (NII) during the reporting quarter rose 19% YoY to Rs 12,314 crore, compared with Rs 10,360 crore in the same quarter last year.
Net interest margin (NIM) increased 15 basis points YoY to 4.11% in the reporting period. However, it was flat sequentially.
Operating profit for the quarter rose 12% YoY to Rs 8,632 crore.
Here is what the brokerages recommended:
Jefferies: Buy | Target: Rs 1,250
Jefferies has a buy view on Axis Bank and has increased the target price to Rs 1,250 from an earlier target of Rs 1,200. The brokerage sees lender’s NIMs for the September quarter as stable while finding its loan growth health for the said quarter. The asset quality remains intact, it said adding that the bank delivered on 18% ROE and this could be anchored in future as well.
Macquarie: Neutral | Target: Rs 980
Macquarie retains a neutral stance on the Axis Bank shares and places the price target at Rs 980. The Q2 profit after tax (PAT) was in line with Macquarie’s estimates. The higher opex was primarily off-set by lower provisions even as deposit growth remained weak in brokerage’s view. THe NIMs sustained on account of increase in yields. Going ahead, the deposit growth will be key monitorable, it said further in its post earnings commentary.
Kotak Equities: Buy | Target: Rs 1,100
Kotak maintains a buy on the scrip for an unchanged price target of Rs 1,100. The view was on account of a stable quarter led by healthy NIMs print along with robust asset quality. The key highlight was stable NIM QoQ led by better lending yields and relatively lower slippages, it said adding that Axis Bank has made significant progress to close the gap with its peers on NIM and this augurs well to build a positive thesis.
Motilal Oswal: Buy | Target: Rs 1,150
Motilal Oswal changed its earnings estimates by 1.7%/2.1% for FY24/FY25 and expects FY25 RoA/RoE of 1.9%/16.6%. It has retained its buy rating with a target price of Rs 1,150, valuing the stock at 1.7X FY25E ABV.
The quarterly results were a mixed bag, Motilal Oswal opined with healthy earnings driven by steady margins and sharper liquidity deployment during the quarter. While the credit growth picked up pace, deposit growth was muted for the second quarter in a row, resulting in a higher C/D ratio of 94%.
“We remain watchful of deposit accretion for the bank as it will be critical to sustain healthy loan growth. Asset quality remains robust, with slippages declining further and recoveries remaining strong,” the brokerage said.
Nuvama: Buy | Target: Rs 1,130
Nuvama has a buy view on Axis Bank stock with a 12-month price target of Rs 1,130. Volatile earnings and an impending equity issue have led to the stock’s discount to peers, Nuvama said in a note as it retained a buy view.
Its valuation is better-than-sector core PPOP and bottoming out of NIM earlier than peers, the brokerage said.
“We are revising FY24/25E EPS by 14%/-3%; TP intact at Rs 1,130/2x BV FY25E,” it said, adding that the earnings were strong, except for deposits which grew slower at 1% QoQ, pulled down by CASA.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)