This 'extremely bullish' share set to give 18% return in three months - Should you buy?

On account of strong fundamentals and technicals of the Axis Bank counter, the market experts are 'extremely bullish' on the banking stock. They are of the opinion that the scrip may show Rs 894 per stock levels in mid-term perspective. Currently, the counter is oscillating around Rs 760 per stock means around 18 per cent return in two to three weeks if 'buy on dips' strategy as suggested by equity market experts is adopted by an investor. Giving details of the fundamentals of the Axis Bank Darpin Shah, Analyst at HDFC Securities told Zee Business online in a written statement, "After accelerated recognition during FY16-18  (GNPAs of 6.8% in March-18), asset quality will improve substantially. This would be led by (1) a paradigm shift in credit risk practices, (2) decreasing proportion of the BB and below rated book and (3) better retail asset quality (against peers). We have factored in slippages of 3.6 per cent over FY19-21E." 

Shah went on to add that the appointment of various industry veterans at key positions (Deepak  Maheshwari, Credit, ex HDFCB), Ganesh Shankaran, Corp banking, ex, FB  and a compliance head (to appear better in the eyes of the regulator)) demonstrates credible efforts. Further, as per the management, new retail and digital heads are expected to join.

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On the shift in credit culture of the Axis Bank Darpin shah of HDFC Securities said, "Addition of fresh talent is supported by a change in credit/risk practices. Credit/ risk heads now report to the MD (against business heads earlier). Further, they are no longer bound by NII and fee targets. We believe this will materially improve underwriting quality."

Standing in sync with HDFC views Simi Bhaumik, a SEBI registered technical equity analyst said, "The Axis Bank counter is extremely bullish and can touch Rs 800 per stock levels in short-term perspective. However, for mid-term, my prediction for the stock is around Rs 850." However, she advised investors to wait for a profit booking into the counter an enter at around Rs 750 per stock levels maintaining stop loss below Rs 740 per counter levels. Asked about what does the short-term and mid-term means in her term Bhaumik said that short-term means around one month while mid-terms means two to three month.

However, Darpin Shah of the HDFC Securities was little more bullish than Simi Bhaumik. suggesting investors buy the Axis Bank counter Darpin Shah said, "I suggest investors to buy the stock as fundamentals of the counter suggests an upside momentum that may show Rs 894/counter mark in the mid-term perspective."