Share price of Axis Bank jumped 5 percent intraday on April 28 ahead of its March quarter result which is scheduled to come out today, April 28.
The third-largest lender is expected to report a decline in Q4 FY20 profit on the back of higher loan loss provisions though lower tax rate may cushion the fall.
Most brokerages expect a double-digit decline in profit after tax which could fall as much as 62 percent year-on-year, while net interest income could grow by more than 16 percent YoY due to slower loan growth (around 15 percent) amid economic crisis and stress in the retail and MSME segment. However, they expect the margin to be stable.
Provisions are expected to be higher due to COVID-19 led current economic crisis and slippages are also likely to be on the higher side due to stress in retail and MSME segments, but asset quality is expected to be stable due to the moratorium announced by the RBI.
"We expect loan growth at 15 percent YoY with a greater focus on retail. NIM will be unchanged at 3.6 percent (led by loan composition and funding costs)," said Kotak Institutional Equities which sees profit declining 47 percent and net interest income rising 16.3 percent YoY.
According to ICICI Direct, margins are estimated at around 3.5 percent thereby leading to NII growth of 19.8 percent YoY.
"Given the current economic situation, provisions are expected to remain higher at around 65 bps in Q4 FY20 versus 55 bps in Q4 FY19. As banks would not be recognising any NPAs during the moratorium period, the gross NPA ratio is expected to be steady at 5.1 percent. Telecom exposure of Rs 16,000 crore remains a hangover ahead. Extension of lockdown could lead to a further slowdown of crucial sectors, thus adding to asset quality worries," said ICICI Direct.
The stock price has gained over 22 percent in the last one month and was quoting at Rs 442.05, up Rs 14.75, or 3.45 percent at 09:35 hours. It has touched an intraday high of Rs 448.50 and an intraday low of Rs 438.90.