Axis Bank’s Strong Q2 Performance Draws Positive Broker Ratings

Shares of Axis Bank experienced a strong market debut on October 18, 2024, following a 4% increase in value, reaching Rs 1,172 per share. This positive movement was spurred by the bank’s impressive performance in the second quarter, where it recorded a notable net profit of Rs 6,917.57 crore. This robust growth was attributed to strong core lending income amid rising credit demand.

The net interest income for the bank saw a nearly 10% year-on-year increase, totaling Rs 13,533 crore, up from Rs 12,315 crore in the same period the previous year. Additionally, the bank’s total income increased to Rs 37,142 crore in the reporting period from Rs 31,660 crore a year earlier. In comparison, Axis Bank reported an income of Rs 35,844 crore in the June 2024 quarter.

Morgan Stanley has maintained an ‘Overweight’ rating for Axis Bank with a target price of Rs 1,445 per share. According to Morgan Stanley analysts, the bank’s asset quality improvements eased previous concerns raised after the first quarter results. Lower credit costs and one-off gains bolstering contingency provisions were cited as contributing factors.

Nomura issued a ‘Buy’ recommendation, indicating that the bank’s quarterly results aligned with muted expectations. Despite soft loan and deposit growth, improved gross non-performing loans, aided by higher write-offs and lower net slippages, were noted as positive aspects of the report.

Macquarie continues its ‘Outperform’ rating with a target price of Rs 1,400, mentioning that despite growth concerns, tax write-backs and treasury gains contributed positively to the profit after tax (PAT). The focus remains on managing incremental stress, given the strengthened balance sheet.

Investec‘s ‘Buy’ rating aligns with the understanding that near-term growth might be subdued, but the management maintains a positive long-term outlook. The bank’s asset quality exceeded expectations during the quarter.

Bernstein also provides an ‘Outperform’ rating despite concerns over asset quality and weak loan growth. The brokerage firm highlighted slowed operational expenses and non-interest income (NOI) contributions pushing the return on assets (RoA) above 1.8%.

During the July-September quarter, Axis Bank’s total deposits grew by 14% on a yearly basis, reaching Rs 10.87 lakh crore compared to Rs 9.56 lakh crore in the previous year. The bank’s current account and savings account (CASA) deposits increased to Rs 4.41 lakh crore from Rs 4.24 lakh crore in the previous year.

It is advised that investors consult with certified experts before making any investment decisions, as the investment opinions expressed are those of the individual experts and not of the publication itself.