Axis Bank share price gained nearly 3 percent in the early trade on January 23 after the company turned profitable in the quarter ended December 2019.
The company has reported a 4.5 percent year-on-year gain in net profit at Rs 1,757 crore. Higher provisions and high base in Q3FY19 due to recovery in the steel sector supported profitability.
The bank had reported a loss of Rs 112.08 crore in the previous quarter.
Net interest income (NII), the difference between interest earned and interest expended, grew by 15.16 percent year-on-year to Rs 6,452.98 crore.
Also Read - Axis Bank turns profitable in Q3 with net at Rs 1,757 cr, NII beats estimates but slippages rise
Loan growth was strong for the quarter at 5.5 percent sequentially and 16 percent (the highest since Q3FY18) YoY, indicating the bank has been gaining market share along with healthy NII.
Net interest margin at 3.57 percent was the highest in the last 10 quarters.
IDFC Securities | Rating: Outperform | Target: Cut to Rs 830 from Rs 840 per share
The research house has cut FY20 earnings to account for higher provisions and slippages.
It expects the company to enhance its competitive position in the banking sector and in the worst case, BB pool will rise by an additional 1-1.2 percent.
Kotak Institutional Equities | Rating: Reduce | Target: Rs 740 per share
The company delivered a mixed revenue performance, while 5 percent YoY earnings growth led by a lower tax rate.
The strong NII offset by a decelerating fee income growth, while slippages stubbornly high (4% of loans) this quarter. The provisions are likely to be high in the near term and could be a near-term risk.
Citi | Rating: Buy | Target: Rs 850 per share
The asset quality stress overshadows the pre-provision operating profit growth. The slippage & provision related concerns could be an overhang.
The reduction in BB and below book & NPA recovery could lead to better trends in FY21. It lower FY20/FY21 profit estimates by 16%/5% to factor in higher provisions.
HSBC | Rating: Buy | Target: Rs 930 per share
The company’s slippages are at an elevated level, but arise mostly from BB & below rated assets. The consistency in delivery should now drive re-rating.
Credit Suisse | Rating: Outperform | Target: R 850 per share
The stable operating performance and credit costs remain elevated. The capital levels are comfortable with CET at 14.3%.
The company should continue to gain market share. It cut estimates by 5-23% on the back of higher credit costs.
At 09:17 hrs, Axis Bank was quoting at Rs 728, up Rs 15.25, or 2.14 percent. on the BSE.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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