Shares of Axis Bank slipped over 4% today, but analysts expect stock to surge up to 40% from here

• The private sector bank reported 54% rise in net profit driven by fall in provisions and improving asset quality performance.
• However, shares of the bank slipped sharply by 4.5% today.
• Analysts believe some of the weakness in the stock could be attributed to fall in margin, higher operating expense and overall poor market condition.

Shares of the private sector bank, Axis Bank slumped sharply by 4.5% on April 29 despite the lender reporting strong profit during the January-March quarter.

The bank posted a 54% year-on-year rise in net profit at ₹4,118 crore compared to ₹2,677 crore in the same quarter last year backed by sharp fall in provisions and improvement in asset quality.

However, analysts believe March quarter was a mixed bag and some of the weakness in the stock could be attributed to fall in margin, higher operating expense and overall poor market condition.

“Axis Bank delivered a mixed performance with net earnings picking up sharply, supported by lower provisions, even as margin declined and operating expense (OPEX) stood elevated,” said analysts at Motilal Oswal.

Analysts at Prabhudas Lilladher also believed that the earnings were mixed as it said, “Loan growth was a tad higher led by retail, but the management was a bit cautious on credit growth in FY23 owing to a tougher global environment. The likelihood of realising the RoE (return on equity) forecast of 16% seems slim in the medium term as margin recovery could be protracted and operating expenditure may remain elevated.”

Meanwhile, some analysts feel the ongoing weakness in the market could have led to the sell off. “The correlation between the earrings and stock price should not be done currently because the market is in a sell off mode,” Deven R Choksey, managing director at KR Choksey Investment Managers, told Business Insider.

On the bright side, most analysts expect the share price of Axis Bank to surge up to 40% in the coming time.
Shares of the company closed lower by 6% to ₹733 per share.



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