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Axis Bank profit surges 62% in Q3: What's your strategy for the stock?

Axis Bank Q3: Net interest income rose 32 percent year-on-year to Rs 11,459 crore on the back of a strong 15 percent loan growth and an expansion in net interest margins.

January 24, 2023 / 10:11 AM IST
Axis Bank

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Axis Bank will be in focus on January 24, a day after the lender beat Street estimates its December quarter earnings.

Axis Bank reported a net profit of Rs 5,853 crore for the third quarter (Q3FY23), a growth of 62 percent over the last year.

The private sector lender's net interest income climbed 32 percent on-year to Rs 11,459 crore on the back of a strong 15 percent loan growth and an expansion in net interest margins.

The bank reported a healthy loan growth of 15 percent to Rs 7.62 lakh crore with the main drivers being loans to retail and small businesses.

SME loans grew the fastest at 24 percent and retail expanded at 17 percent.

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Here is what brokerages have to say about the stock and the company after its December quarter earnings:

Sharekhan

The brokerage house maintains its 'buy' rating with an unchanged price target of Rs 1,140. It remains positive on the bank as at least in the near to medium term, there are no asset-quality concerns.

The bank has additional contingency buffers of 150 bps of advances over and above the PCR, it said.

The brokerage expects operating leverage to kick in and lend support to PPoP growth in the medium term, while near-term focus would be on Citi’s portfolio integration.

Morgan Stanley

The brokerage house has kept the ‘overweight’ rating on the stock and raised the target price to Rs 1,200 per share as the beat was all around with NIMs, fees, costs surprised positively.

The retail deposits and LCR were in-line with HDFC Bank and ICICI Bank, it said. Valuations at 1.8x FY24 P/BV looks attractive, assuming some moderation from current levels, reported CNBC-TV18.

Bernstein

The research firm has kept the ‘outperform’ rating with a target at Rs 1,000 per share as the Q3 is checking all right boxes, strengthening the case for a re-rating.

The strong growth in EPS led by healthy margin expansion and healthy CASA led deposit growth, sizable margin expansion. Healthy fee growth would be main positive while tad slower loan growth a negative, reported CNBC-TV18.

CLSA

The broking house has maintained the ‘buy’ rating on the stock with a target at Rs 1,250 per share as Q3 was a beat with better margin & lower opex leading to over 50 percent core PPoP growth.

The rising margin is an industry phenomenon and moderation in opex growth is a positive, it said.

The benign credit cycle continues and opex heading in the right direction, while retail deposit mobilisation remains key deliverable.

CLSA raises FY24-25 net profit estimates by 1-3 percent and expects RoE of more than 16 percent, reported CNBC-TV18.

UBS  

The foreign brokerage house has maintained the ‘buy’ call on the stock and raised the target to Rs 1,100 per share.

Margin expansion and operating leverage drive the Q3 beat. The higher yielding loans are growing faster, it said. The company management believes that internal capital generation sufficient to fund growth, reported CNBC-TV18.

Macquarie 

The research firm stays ‘neutral’ on the stock with a target at Rs 790 per share.

The earnings beat was due to better performance on margin, however, weak liabilities franchise is a concern, it said.

The loan growth is lagging its larger peers. The bank is well capitalised and there is a chance of capital raising by end of Q4FY23, reported CNBC-TV18.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Moneycontrol News
first published: Jan 24, 2023 08:16 am

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