Axis Bank shares fall after strong results. Should you buy, hold or sell the stock now?

Axis Bank shares edged lower on Tuesday, even as India's fifth largest lender by market value reported a strong set of results for the October-December period driven by strong interest income, higher fees and moderating operating expenses. The Axis Bank stock weakened by Rs 14.5 or 1.5 per cent to Rs 918.9 in early deals to Rs 923.1 apiece on BSE. 

Brokerages largely have positive views on Axis Bank after the earnings announcement, with targets as high as 34 per cent from Monday's closing price.

Minutes after the closing bell on Monday, the bank reported a 61.9 per cent year-on-year jump in quarterly net profit to Rs 5,853.1 crore, beating analysts' estimates. Its net interest income (NII) — or the difference between interest earned and interest paid — increased 32.4 per cent to Rs 11,459.3 crore, according to a regulatory filing.

According to Zee Business research, Axis Bank was estimated to report a quarterly net profit of Rs 5,480 crore and net interest income of Rs 10,900 crore.

Axis Bank's net interest margin (NIM) — a key measure of profitability for lenders — improved by 30 bps sequentially to 4.26 per cent for the quarter ended December 2022.

What brokerages say on Axis Bank 

• UBS maintains 'buy' on Axis Bank, raises target price by Rs 70 to Rs 1,100; brokerage attributes quarterly beat to margin expansion, operating leverage
• CLSA retains 'buy' on Axis Bank with a target of Rs 1,250, raises net profit estimates for 2024, 2025 by 1-3 per cent 

• Morgan Stanley maintains 'overweight, raises target to Rs 1,200 from Rs 1,150; brokerage says NIM, fees, costs surprised positively in all-round beat; Moprgan Stanley finds Axis Bank valuation attractive 

• JPMorgan retains 'overweight' on Axis Bank, raises target to Rs 1,100 from Rs 990 

• HSBC continues with 'buy' call, raises target to Rs 1,200 from Rs 1,188

What's pulling the Axis Bank stock lower?

"Axis Bank results are good but concerns remain about whether the sector's earnings will remain good going forward... Deposit growth so far has not been good for any bank in this earnings season," AK Prabhakar, Head of Research at IDBI Capital Markets, told Zeebiz.com.

"Even ICICI Bank (shares) did not move up much owing to profit booking after good results," he said.

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