Axis Bank shares: Brokerages see up to 40% upside, bullish post Q1 results

Shares of Axis Bank plunged nearly 2% in Tuesday’s opening deals to 717 apiece on the BSE after the bank reported Q1FY23 results on Monday post market hours. Axis Bank’s net profit nearly doubled to 4,125 crore in the April-June quarter of FY23, helped by decline in bad loans as compared to 2,160 crore in the corresponding quarter of the previous fiscal.

Net interest income (NII), the difference between interest earned and interest expended, grew by 21% year-on-year to 9,384 crore. It was 7,760 crore in the corresponding quarter of last year. The lender’s asset quality improved as gross Non-Performing Assets (NPAs) declined to 2.76% as on June 30 this year and net NPAs or bad loans slipped to 0.64% of net advances furnished by June-end.

Brokerages on Axis Bank shares

“We believe Axis Bank is structurally improving on credit under-writing and operating parameters due to its investments in distribution, manpower and technology over last few years. Rising share of retail/rural/SME loans and improving quality of deposits would narrow the gap with peers on NIM/PPOP/RoE. We expect 25% EPS CAGR over FY22-25 with 15.7% RoE in FY24/FY25. Axis Bank is our top pick in banks,” said brokerage Ambit while maintaining Buy rating on the bank stock with target price of 1,003, implying about 40% upside from current level.

“While growth in retail and mid-corporate loans was strong, large corporate loans fell 10% QoQ as state banks sacrificed risk-based pricing to gain share. Axis is the only large bank where slippage ratio fell QoQ. INR7bn trading loss is in-line. If Axis sustains the core performance of Q1FY23, the stock’s discount to peers will narrow,” said Edelweiss with ‘Buy’ tag on Axis Bank shares with 12-month target price of 970.

“The bank is confident that with rates increasing, pricing stabilizing and corporate demand reviving, it is well positioned to chase growth in the corporate segment Valuation comfort underpins our BUY stance on Axis Bank despite lower ROA than HDFC Bank and ICICI Bank. We maintain BUY with a target price (TP) of 990,” said Nirmal Bang.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint.
Download The Mint News App to get Daily Market Updates.

More
Less

Subscribe to Mint Newsletters

* Enter a valid email

* Thank you for subscribing to our newsletter.

First article

Leave a Reply

Your email address will not be published. Required fields are marked *