What Dalal Street Made Of Axis Bank’s Third Quarter Performance

Brokerages maintained stance on Axis Bank Ltd., even as the country’s third largest private lender’s net profit for the December-ended quarter fell, missing estimates.

The bank’s asset quality, however, improved, even as it reported slippages worth Rs 4,430 crore in the third quarter.

Axis Bank’s net profit rose 25 percent to Rs 726 crore compared to the year-ago period, the private lender said in an exchange filing. This was lower than the Rs 818 crore consensus estimate of analysts tracked by Bloomberg.

Here’s what the brokerages had to say on Axis Bank:

JPMorgan

• Maintained ‘Overweight’, raised target price to Rs 700 from Rs 650, with an upside potential of 14.5 percent.
• Guidance of 225-260 basis points with normalised credit costs expected.
• See the next two-three quarters as challenging, given the uncertainty over timing and quantum of back-book provisioning.
• At about two times price-to-book and a FY20 return on equity estimate of 19.5 percent, Axis Bank is our top value pick.

Morgan Stanley

• Maintained ‘Overweight’; target price of Rs 770, with an upside potential of 26 percent.
• Impaired loans at Axis Bank showed good trends after a weak December quarter.
• Expect asset quality and core pre-provision operating profit trends to be volatile over the next four quarters.
• Expect continued improvement in impaired loans over the next four quarters.
• This should drive strong stock performance over the next 12 months.

Credit Suisse

• Maintained ‘Neutral’, raised target price to Rs 595 from Rs 525, with a downside potential of a little over 2 percent.
• Asset quality stabilises, operating profitability yet to improve.
• Expect credit costs to normalise from 2.7 percent in current financial year to 1.2 percent in financial year 2020.

CLSA

• Maintained ‘Buy’, raised target price to Rs 730 from Rs 650 with an upside potential of 19.5 percent.
• Key positive in the result was improvement in asset quality.
• Expect earnings to normalise from the next fiscal.