Shares of India’s fourth largest private bank by market value, hit their fresh 52-week high of ₹ 990.00 on Thursday’s intraday trades after the banking company announced its results for the June quarter of the financial year 2023-24. Its shares were trading at ₹ 952.05 apiece on Friday trade.
Axis Bank’s net interest income grew 27 percent year on year (YoY) and 2 percent quarter on quarter (QoQ) to ₹ 11,959 crores. Its net interest margin came in at 4.10 percent, up 50 bps YoY. The bank’s operating revenues grew 38 percent and operating profit at 50 percent YoY. Its fee income during the June quarter grew 28 percent YoY to ₹ 4,488 crores.
Axis Bank wrote off recoveries worth ₹ 554 crores. As of June 30, 2023, its reported Gross non-performing assets stood at 1.96 percent against 2.02 percent in the previous quarter and Net NPAs at 0.41 percent against 0.39 percent in the previous quarter. The bank’s net profit grew by 41 percent to ₹ 5,797 crores, against ₹ 4,125 crores in the previous quarter.
Ex-Citi Numbers
Axis Bank had completed the acquisition of Citibank’s India’s consumer banking business, effective March 01, 2023. Nuvama believes that it is important to assess Axis Bank’s performance ex-Citi.
Axis Bank made a public disclosure of the item-wise income statement of Citi in the March 2022 presentation. Using that as the base, the brokerage calculated that ex-Citi, NII fell 1 percent QoQ; other income slipped 10 percent QoQ. Therefore, standalone numbers appear softer than merged numbers.
Yet, the brokerage believes that the franchise has scope to improve and that the management could take more time to extract maximum value out of Citi. As such, it has retained a ‘Buy’ rating on a longer-term view.
Targets
Jefferies has a ‘Buy’ call on the stock with a price target of ₹ 1,200. This translates to an upside of 24.85 percent as compared to the thursday’s closing price of ₹ 961.15. The brokerage said that the bank’s margins held up better than feared, adding that a large part of the cost hike has seeped through. It noted that the trends are likely to clear up from Q2. Axis is among its top picks given favourable risk reward.
Yes Securities has a ‘Buy’ rating on the stock with a target price of ₹ 1,300.00. This translates to an upside of 35.25 percent as compared to its thursday closing price. Meanwhile, Motilal Oswal believes that the bank delivered stable performance in Q1FY24, with earnings driven by higher ‘other income’ even as margins compressed on expected lines. The brokerage reiterated its ‘Buy’ rating on the stock with a target price of ₹ 1,150 per share.
Written by Simran Bafna
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