Axis Bank share price rallied most in six months even as country's third largest private sector lender by assets reported quarterly losses for the first time ever. It is also going through a big controversy due to which its chief Shikha Sharma will be quitting. Net losses for the March quarter of financial year 2018 came in at Rs  2,188.74 crore due to higher provisioning for bad loans. Axis Bank had registered a net profit of Rs 1,225.10 crore in the same quarter of fiscal ended March 2017.

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The Axis Bank share price rallied as much as 5.5 per cent to Rs 522 on the BSE. Analysts believe recognition of bad loans at a greater scale and a positive management commentary soothed investors who believe worst is now over for Axis Bank. The lender substantially raised its provisioning to cover for bad loans and contingencies during the quarter to Rs 7,179.53 crore, while it had parked aside Rs 2,581.25 crore in the same quarter a year ago, it said in a regulatory filing.

Global brokerage Nomura maintained 'buy' on Axis Bank stock but revised target price to Rs 630 from Rs 675 earlier. "The quantum of asset quality turned negative, but underlying quality is not bad," said Nomura in a results review report. "We expect credit cost to normalise to below 100 bps by FY20, and return on equities (RoEs) to normalise to 15 per cent by FY20," it added. 

Kotak Institutional Equitues maintained 'add' rating on Axis Bank stock with a target price of Rs 600 (unchanged). 

At this target price, Axis Bank stock would trade at 2.2 times book and 14 times March 2020E EPS for RoEs in the range of 13-14 per cent. "In our view, there is much greater comfort in assigning relatively higher multiples on cleaner book with potential to return to mid-teen RoEs in the medium term.

Fundamental strengths such as high CASA ratio, distribution network and high and growing share of retail loans are key positives," said Edelweiss. 

"The key risk to RoE improvement is a prolonged NPL resolution leading to higher-than-expected credit costs," it added. 

Brokerage Motilal Oswal cut earnings on sharp deterioration in asset quality and higher operating expenditure, thus driving 9 per cent decline in FY20E ABV. The brokerage valued the stock at Rs 600 per share (2.1x FY20E ABV for standalone bank) and valued Axis Bank subsidiaries at Rs 35 per share (post 20 per cent holding company discount) in SOTP valuation. MOSL has a  BUY rating on the stock.

Meanwhile, for the entire fiscal 2017-18, the Axis Bank's a net profit fell by 92.5 per cent to Rs 275.68 crore. It had a net profit of Rs 3,679.28 crore in fiscal ended March 2017.

Total income during the fiscal increased to Rs 56,747.40 crore, from Rs 56,233.47 crore.

On asset front, the gross non-performing assets (NPAs) stood at 6.77 per cent of the gross advances by end of March 2018 as against 5.04 per cent in year-ago period.

In absolute terms, Axis Bank gross NPAs were Rs 34,248.64 crore as on March 31, 2018, up from Rs 21,280.48 crore as on end-March 2017.

Axis Bank net NPAs or bad loans percentage stood at 3.40 per cent (Rs 16,591.71 crore) from 2.11 per cent (Rs 8,626.55 crore).

The Net Interest Income (NII) in the fourth quarter of the last fiscal was flat at Rs 4,730 crore, Axis Bank said.