Gladiator Stocks - Axis Bank: ICICI Direct

ICICI Direct's research report on Gladiator Stocks

Technical View

The share price logged a resolute breakout from the last three months triangular consolidation pattern indicating conclusion of corrective trend, auguring well for structural turnaround. Thereby offering fresh entry opportunity. Over the past three months consolidation phase the stock has seen strong volume of more than double of the 50 weeks average volume of 9 cr. share per week highlighting accumulation and larger participation at support area Based on the above technical observations we expect the stock resume up move and head towards Rs 508 levels in the coming months as it the confluence of the previous major breakdown area and 50% retracement of the February – March decline (Rs 760-286) placed around Rs Rs 520 levels.

Fundamental View

Axis Bank, third largest private bank in terms of advances, offers entire spectrum of financial services to customers covering large and mid-corporates, MSME, agriculture and retail businesses. The long term focus is on loans offering higher return on risk-weighted basis and tight control on cost to enhance return ratios. In a bid to gain traction in the life insurance sector, Axis Bank has entered into a transaction with Max Financial, which post completion will become 70:30 JV in Max Life Insurance. Covid-19 and related lockdown would delay a revival in RoE. However, given healthy asset mix, liability strength, adequate capital and superior customer profile, we believe the bank is poised to face near term challenges and benefit in the phase of normalisation. Hence, we remain positive on the fundamentals of the stock.

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