Should INVESTORS buy Axis Bank shares after strong Q1 numbers? Here is what Brokerages recommend

On the back of strong first-quarter numbers, the brokerages are bullish on the Axis Bank shares, with the majority of them raising the price target of the stock. Axis Bank, India’s third-largest private lender reported a 94.2 per cent year-on-year jump in the standalone profit to Rs 2160.15 crore in Q1FY22.

The bank in the same quarter in FY21 had posted a Rs 1112.17 crore, which was mainly impacted by the higher provisions due to nationwide lockdown to control the first wave of Covid.

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Similarly, Net interest income (NII0 grew by 11 per cent to Rs 7,760.27 crore in the June-ended quarter of FY22, as compared to Rs 6,985.31 crore in the corresponding quarter last fiscal.

Forecast Axis Bank’s PPoP growth to improve to a 15 per cent compound annual growth rate by FY23, says CLSA while maintaining a Buy stance with a price target of Rs 1050 per share. It expects retail stress to normalise in H2 leading to an RoE of 15-15.5 per cent by FY23.

Lower net interest margin and higher operational expenditure could drag Axis Bank’s pre-provisioning operating profit, says CITI, and lowers FY22/23 profit estimates by 8/3 per cent respectively. It raises price target to Rs 925 per share while maintaining a Buy rating for Axis Bank shares.

Similarly, Morgan Stanley expects strong future earnings for Axis Bank from lower credit cost, better pre-provisioning operating profit, maintains an Overweight stance on the stock. The brokerage says, the bank missed its Q1 estimates amid higher provisions. It sets a price target of Rs 1000 per share.

The stock on Monday opened weak, eventually to end flat in the green with a minimal surge of 0.12 per cent to Rs 756.15 per share on the BSE, as against around a quarter per cent decline in BSE Sensex.