Axis Bank Q1 results fall short of Street estimates; should you buy, sell or hold private bank stock?

Axis Bank shares moved within a tight range around the flatline on Thursday after the private sector lender reported a weak set of financial results.

Axis Bank shares struggled around the flatline on Thursday after the private sector lender reported a set of financial results that fell short of Street estimates. | Image: Reuters

Axis Bank shares swung within a tight range between gains and losses in early deals on Thursday, a day after the private sector lender reported a weak set of financial results for the quarter ended June. At 9:25 am, the Axis Bank stock was up 0.1 per cent at Rs 978.2 apiece, having gyrated between Rs 971.5 and Rs 989.2 within the first few minutes of trade.

Axis Bank Q1 results: A summary

After market hours on Wednesday, Axis Bank reported a standalone net profit of Rs 5,797.1 crore for the first quarter of the current financial year. Its net interest income (NII) — or the difference between interest earned and interest paid — grew 27.4 per cent on a year-on-year basis to Rs 11,958.8 crore, according to a regulatory filing.

The lender's net interest margin (NIM) — a key measure of profitability for lenders — slipped to 4.1 per cent for the June quarter from 4.22 per cent the previous quarter.

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According to Zee Business research, Axis Bank's quarterly net profit was estimated at Rs 5,840 crore and NII at Rs 12,000 crore.

The lender's deposit growth came in at 17 per cent on a year-on-year basis for the three-month period, as against Zee Business analysts' estimate of 20-22 per cent.

Axis Bank's gross non-performing assets (NPAs) as a percentage of total loans came in at 1.96 per cent for the April-June period as against 2.02 per cent for the previous three months, according to the filing.

Its net NPAs were at 0.41 per cent as against 0.39 per cent the previous quarter. Read more on Axis Bank Q1 results

EDITOR'S TAKE | Weakest results in the private banking sector

Zee Business Managing Editor Anil Singhvi pointed out that the lender's results were operationally weak, with an increase in provisions as well as slippage.

"The numbers are below estimates on all parameters but there were a lot of shorts (in the stock) over the last week," he said.

What brokerages make of Axis Bank earnings

According to CLSA, which maintained a 'buy' rating on Axis Bank with a target price of Rs 1,200 for the stock after the earnings announcement, the lender's core pre-provision operating profit (PPOP) fell short of the brokerage's estimate by five per cent partly due to integration costs.

CLSA's target price implies an upside of 22.8 per cent in Axis Bank shares from Wednesday's closing price.

Brokerage	Rating	Target price	TP vs Wednesday's closing price
CLSA	Buy	Rs 1,200	+22.8%
JPMorgan	Overweight	Rs 1,000	+2.4%
Jefferies	Buy	Rs 1,200	+22.8%
Citi	Buy	Rs 1,170	+19.8%
Goldman Sachs	Buy	Rs 1,110	+13.6%
Macquarie	Neutral	Rs 980	+0.3%

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