Axis Bank shares gain over 5% as Q4 profit surprised positively

Shares of the private sector lender Axis Bank in Thursday’s trade (April 25) started on a positive note with gains of over 3 per cent at Rs 1098.3 per share after the lender surprised positively with 13 per cent beat on profit.

At day's high, the stock after gaining 5.2 per cent, scaled levels of Rs 1,119 per share on the BSE.

A higher-than-estimated profit is attributed primarily to the higher lending income and strong loan growth at the bank during the period under review.

On a standalone basis, the bank’s net profit stood at Rs 71.3 billion for the March 31 ended quarter, compared with analysts' estimates of 55.40 billion rupees, as per LSEG data, the Reuters report said. In the corresponding period last year, the bank reported a loss of Rs 57.28 billion on the back of one-time expense incurred on the back of its $1.41 billion Citi deal.

Its net interest income - the difference between interest earned and paid - rose 11.5% to 130.89 billion rupees. The bank's net loans grew 14%, while total deposits rose 13%.

Brokerages view on Axis Bank after Q4 results

Global brokerage Jefferies continued with its buy stance on the stock with a target of Rs 1380, a potential upside of 5 per cent. The company’s profitability has been aided by better NIMs, higher fees & stable credit costs, said the brokerage. Even as loan growth stays softer in FY25, to improve loan to deposit ratio (LDR), margins can offset some impact. Further, it added that valuations at 1.7x FY25 adjusted PB remains attractive.

CLSA also continued with its buy stance with a target of Rs 1310. The brokerage highlighted that while LDR at the company declined 250 bps, NIM saw an improvement sequentially. Also, it pin-pointed that while deposit grew at a healthy rate of 6 per cent sequentially, CASA ratio logged modest improvement. Margins improved 5bps QoQ, contrary to fears of a decline, it added.

Domestic brokerage JM Financial has also continued with its buy stance and suggested a target of Rs 1330 per share. The brokerage is of the view that the lender’s Q4 performance displays promising results on liabilities front. Axis bank remains well capitalised with organic net accretion of 44bps YoY. CET1 ratio stands 13.74% in 4Q24 including impact of INR 16.12bn for investment in Max Life and regulatory change in RWA. The bank has proposed an enabling resolution for capital raise. They continue to invest on distribution and technology while ensuring profitability. 

Axis Bank remains one of the top picks of the brokerage as it believes it can re-rate further given sustained pick up in deposit growth while maintaining margin trajectory and asset quality. JM Financial expects avg. ROA/ ROE of 1.8%/ 17.2% over FY25-26E. Maintain BUY with SoTP based target price of Rs 1,330 valuing the core bank at 1.9x FY26E BVPS with subsidiary valued at Rs 76.