Axis Bank woos Street with strong Q2 show; here is what investors may do

Axis Bank shares were in demand on Thursday after the private sector lender reported a strong set of Q2 results on all parameters.

Axis Bank reported a strong set of Q2 numbers on October 25. | Image: Reuters

Axis Bank were in demand on Thursday after the country's fourth largest private sector lender by market value reported a strong set of quarterly financial results. The Axis Bank stock gained by as much as Rs 13.7, or 1.4 per cent, to Rs 969 apiece on BSE.

The bank registered a 10 per cent year-on-year jump in standalone net profit for the July-September period with a better-than-expected improvement in asset quality.

Axis Bank Q2 results: A summary

After market hours on October 25, the private sector bank reported a standalone net profit of Rs 5,863.6 crore for the second quarter of the current financial year as against Rs 5,329.8 crore for the corresponding period a year ago, beating Street estimates by a wide margin. Its net interest income (NII), or the difference between interest earned and interest paid, increased 18.9 per cent to Rs 12,314.6 crore, according to a regulatory filing.

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According to Zee Business research, Axis Bank's quarterly net profit was estimated at Rs 5,700 crore and NII at Rs 11,910 crore.

Axis Bank's net interest margin, a key measure of profitability, stood at 4.11 per cent, as against the Zee Business analysts' estimate of 3.9-3.95 per cent.

The lender reported a 48.2 per cent increase in provisions to Rs 814.6 crore, and its gross slippages declined 3.8 per cent to Rs 3,254 crore.

Its asset quality improved, as reflected in gross non-performing assets (GNPAs) being at 1.73 per cent of total loans for the September quarter as against 1.96 per cent three months ago. The bank's net non-performing assets (NNPAs) decreased by five basis points sequentially to 0.36 per cent.

EDITOR'S TAKE | Results better than estimates on all parameters

Zee Business Managing Editor Anil Singhvi recommends buying Axis Bank futures for targets of Rs 965, Rs 975, Rs 985 and Rs 995 with a stop loss at Rs 950.

Axis Bank's results were the best among all lenders, he highlights.

What analysts say

Here's how some of the top brokerages view Axis Bank after the lender's strong quarterly performance:

Brokerage	Rating	Price target	Upside vs Wednesday's close
CLSA	Buy	Rs 1,200	25.6%
JPMorgan	Overweight	Raised by Rs 100 to Rs 1,100	15.1%
Citi	Buy	Rs 1,170	22.5%
Jefferies	Buy	Raised by Rs 50 to Rs 1,250	30.8%
Nomura	Buy	Rs 1,150	20.4%
Macquarie	Neutral	Rs 980	2.6%

According to Jefferies, which maintained a 'buy' call on Axis Bank after the earnings announcement and gave its price target for the stock a lift of Rs 50 to Rs 1,250, the key positive in the lender's financial results was the one basis point sequential decline in the net interest margin to 4.1 with healthy loan growth as well as asset quality.

The brokerage's target implies a 30.8 per cent upside in Axis Bank shares from their previous close.

Jefferies values the stock at 1.5 times its adjusted price-to-book estimated for the year ending March 2025.

Axis Bank shares: Past performance

Axis Bank shares finished the September quarter with a gain of five per cent, better than a 2.4 per cent rise in the headline Nifty50 index as well as a 0.4 per cent decline in the high-beta Nifty Bank gauge.

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