Axis Bank shares fall over 2% on profit booking after strong Q3 performance; Should you buy, hold or sell-

Axis Bank shares fall over 2% on profit booking after strong Q3 performance; Should you buy, hold or sell?

Axis Bank share price fell 2.60% to Rs 909.10 on Tuesday on profit booking after the lender posted strong Q3 results for the quarter ended December 2022. The bank reported a net profit of Rs 5,853 crore for the third quarter of the fiscal year 2023, higher by 62% on-year. Net interest income (NII) grew 32% to Rs 11,459 crore while the net interest margin (NIM) stood at 4.26% as of December 31, up 73 bps on year. Gross non-performing asset ratio (NPA) stood at 2.38% as of December 31, lower by 79 bps on-year. The net NPA ratio was at 0.47%, down 44 bps on-year.

Axis Bank shares have risen 24% in past 6 months and nearly 50% in past 5 years. The shares touched 52-week high of Rs 970.45 on 4 January 2023 and 52-week low of Rs 618.10 on 23 June 2022. On Tuesday it touched an intraday high of Rs 934.30 and low of Rs 903.75.

Target price: Rs 1,130

Axis Bank’s Q3FY23 earnings beat I-Sec and consensus expectations. “Once again, it reported consolidated RoA (annualised) at 2.0% and RoE at 19.8%. The beat was across operating metrics, especially with NIMs soaring as much as 30bps QoQ to 4.26%. Going forward, given moderate balance sheet expansion (3% QoQ / 10% YoY), we believe Axis needs to accelerate its retail TD engine to support asset growth with the C/D ratio now at 90%. Also, sustained efforts are needed to drive ‘cost to assets’ below 2% in the medium term. NIMs settling much higher than the steady-state guidance and growth in focused segments would sustain the current earnings trajectory.” the brokerage said. The analysts at ICICI securities maintain BUY with an unchanged target price of Rs 1,130 assigning 2.3x FY24E book.

Yes Securities: Buy

Target price: Rs 1,300

The brokerage reiterates BUY rating on Axis Bank with a revised price target of Rs 1300. “AXSB’s conservative approach to asset quality recognition continued even as outcomes remained under control in the absolute sense. Margin now sits at 4.26% which is a far cry from a subdued 3.53% a year ago and an outcome of capital allocation choices and other factors,” analysts at Yes Securities said.

Nirmal Bang: Buy

Target price: Rs 1,132

“Despite all the stress indicators showing a sequential improvement, the bank sustained cumulative provisions coverage at 139%. We have raised our earnings estimates and expect the bank to report RoA of 1.8% and ROE of 16.6% by FY25E. Valuation comfort underpins our BUY stance on Axis Bank. We maintain BUY with a target price (TP) of Rs1,132 (2x 1HFY25E ABVPS),” analysts at Nirmal Bang said.

Motilal Oswal: Buy

Target Price: Rs 1,130

Axis Bank, according to brokerage, delivered a stable performance in 3QFY23, driven by margin expansion, high other income and improving cost metrics. “Business growth was healthy, led by the corporate segment. Asset quality continued to improve, even as slippages increased marginally, compensated by healthy recoveries and upgrades. The restructured book moderated further, while a higher provisioning buffer provided comfort,” analysts at Motilal Oswal said. The brokerage tweaks the estimate slightly and expect AXSB to deliver RoA/RoE of 1.9%/17.3% in FY25. It maintains Buy with a target price of Rs 1,130 (2.0x Sep’24E ABV).