Axis Bank shares plunge 6% after poor Q3 results

Shares of Axis Bank dropped by 6% during early morning trade after the bank on Thursday reported 73% drop in net profit for the quarter ended on December 30.

At 0934 hours the shares of the bank were trading at Rs 456.20 per piece, down 5.69% or Rs 27.50 on BSE. 

During the quarter, slippages were Rs 4,212 crores down from Rs 8,772 crores sequentially. Recoveries and upgrades were Rs 350 crores while write-offs during the quarter were Rs 122 crores. 

Slippages declined 48% QoQ to Rs 45.6 billion, but still remained elevated (5.8% slippage ratio). 30% of the corporate slippages came from non-watch list accounts, as against 11% in 2QFY17. 

"Elevated slippages, weak outlook and expected pressure on core income are likely to keep return ratios under pressure. We expect earnings to normalize only in FY19," Alpesh Mehta, Analyst, Motilal Oswal, said in a research report. 

Having similar views, Vaibhav Gupta of CLSA said that after disappointing in Q2FY17, Axis reported lower slippages in 3Q, but annualised delinquencies are still high at 6% of past year loans.

As on 31st December 2016, the Bank’s Gross NPA was Rs 20,467 crores against Rs 16,379 crores as on 30th September 2016. 

For net stress loans, Mehta said that Total Net Stree Loans stood at Rs 280 billion during the quarter, as against Rs 326 billion in Q2FY17. Power (49%) and Iron and Steel (15%) constitute majority of the watch list, which remains a key risk.