Axis Bank shares zoom up 4% despite weak Q2; Here's what global brokerages suggest

Axis Bank shares zoom up to 4 per cent in early trade on Friday despite posting weak results. Shares of the private lender last traded at Rs 1,171.25 per share, up 3.45 per cent, while at the day's high hit levels of Rs 1,175.95 per share.

During Q2, the company's PAT rose 18 per cent year-on-year to Rs 6,918 crore. Nonetheless, provisions grew sharply from Rs 815 crore to Rs 2,204 crore. Also, loan growth has come at its lowest levels in 12 quarters. 

Nonetheless, on the positive side, NII inched higher by 9 per cent to Rs 12,314 crore, while net interest margins - a key profitability metric declined by 0.12 per cent to 3.99 per cent for the review quarter.

Here's what brokerage makes of Axis Q2 results

Global brokerage Nomura is bullish on the stock and gives a buy rating and a target of Rs 1,370. The set target implies an upside of over 21 per cent. As per the brokerage, the lender posted steady quarter 
amid muted expectations. Also, Loan/deposit growth remained soft q-q but was in-line; higher write-offs, and lower net slippages aid GNPLs, added the brokerage.

Treasury gains offset softer core PPOP; one-off tax gains used to shore up provision buffers, noted Nomura.

Morgan Stanley maintained its overweight call on the stock with a target of Rs 1,445 per share, meaning an upside of 28 per cent. The brokerage said asset quality at the lender improved during the review period. The stock has underperformed Bankex since 1QF25 owing to asset quality concerns, it added.

Also, on the positive front, 2Q has been better for the lender with credit cost much lower QoQ, added the brokerage.

Bank used one-off gains to lift contingency provisions, noted Morgan Stanley.

Meanwhile, Macquarie has reiterated an outperform call on the stock with a target of Rs 1,400 per share. The company posted decent quarter with looming growth concerns. Tax write-backs and treasury gains drove PAT beat.

Contingent buffers strengthen balance sheet; eye on incremental stress accretion it added.