RBI advises Axis Bank to restructure Axis Bank-Max Life deal
In this edition of Ideas for Profit, Moneycontrol Sakshi Batra discusses the second-quarter performance of Axis Bank and why a valuation re-rating is likely
Axis Bank has been aggressive in making provisions on potential NPA losses. That’s a comfort for investors but the quantum of loans that will ultimately go for restructuring and performance of low-rated exposure will be key.
The private sector lender on October 28 reported a net profit of Rs 1,683 crore for Q2FY21 as against a net loss of Rs 112 crore in Q2FY20. The bank’s operating profit for the quarter grew 16 percent YoY and 18 percent QoQ to Rs 6,898 crore.
The valuation of Axis Bank is extremely attractive, especially for finding a place in the long-term portfolio.
The bank said its net interest income (NII) grew 20 percent YoY to Rs 7,326 crore in Q2FY21 from Rs 6,102 crore in Q2FY20. The net interest margin (NIM) for Q2FY21 was 3.58 percent as against 3.51 percent for Q2FY20.
HDFC Securities expects around 10 percent YoY loan growth and a marginal improvement in NIMs to drive core earnings (NII) growth of 16 percent YoY.
The home loans priced at 6.90 percent onwards are under Axis Bank's 'Dil se Open Celebrations' that offer deals and discounts on purchase through its credit and debit cards.
According to ICICI Direct, Buy Axis Bank in range of Rs 455-465,Target: Rs 545,Stop Loss: Rs 416,Time frame: Three months.
The moves come even as the pandemic has forced the domestic and global banking sector to cut jobs and slash salaries
Vanguard offloaded 7 lakh shares of Housing Development Finance Corp (HDFC) worth Rs 119.84 crore, 3.57 lakh scrips of Hindustan Unilever worth Rs 72.62 crore and 6.06 shares of ICICI Bank for Rs 21.60 crore.
Unlike regular gig roles, the new-age gigs would cover qualified professionals professionals. The compensation would be on par or even higher than that of a regular hire. India Inc would have close to 10-15% new-age gig roles in the next five years.
The banks have learnt their lesson after the last crisis, they are not going to be in a lending hurry, said Amitabh Chaudhry, MD, Axis Bank.
Axis Bank now proposes to acquire 17.002 percent of the equity share capital of Max Life, a material subsidiary of Max Financial Services.
As per media reports, Max Life Insurance and Axis Bank have modified some terms of their proposed joint venture (JV) in order to comply with regulatory norms.
In April, Axis Bank said it plans to raise its stake in Max Life Insurance to 30 percent from 1 percent.
Dahiya said the bank will look for good talent, including young people, experienced mid-level professionals and women, from across the country.
This will be Axis Bank's second major capital raising in 2020, after it raised Rs 10,000 crore earlier in August through a qualified institutional placement (QIP).
“COVID-19 has had almost the same positive impact as demonetisation," said Prabhu Ram, Managing Director and Group CEO of Payswiff.
Experts are of the view that there are no visible signs which suggest that investors should ho short but a close below 11299 can be considered as an initial sign of weakness.
It was also one of the top index gainers and was one of the most active stocks on NSE in terms of value with 70,67,147 shares being traded.
The issue price is at a discount of 5% (i.e. Rs. 22.09 per equity share) to the floor price of Rs 442.19 per equity share for an aggregate value of Rs 100,000 million
A preliminary enquiry against Cox & Kings is already ongoing based on complaint of payment default worth Rs 239 crore by IndusInd Bank