Following its Q3 earnings on Tuesday, Morgan Stanley reiterated an ‘Overweight’ stance while Nuvama maintained a ‘Buy’ view. However, Motilal downgraded the rating to ‘Neutral’ seeing challenges on the growth front.
The fourth largest private sector lender reported a 4% year-on-year jump in its standalone net profit to Rs 6,071 crore for the said quarter. It was Rs 5,853 crore in the last-year period. The profit was marginally higher than the ET Now Poll estimate of Rs 5,924 crore. Net interest income (NII) in the third quarter rose 9% to Rs 12,532 crore.
Read More: Axis Bank Q3 Results: Net profit rises 4% YoY to Rs 6,071 crore, beats estimate
Here’s what brokerages recommended:
Morgan Stanley: Overweight | Target: Rs 1,450
Morgan Stanley remains overweight on Axis Bank for a price target of Rs 1,450. Calling its Q3 numbers “good”, the US brokerage trimmed growth estimates on tight liquidity conditions. Both asset quality and core PPOP (pre-provision operating profit) topped estimates. Axis also delivered strong improvement in its franchise, the brokerage noted.
Nuvama: Buy | Target: Rs 1,215
Nuvama has rolled forward the base, yielding a target price of Rs 1,215/2x BV 1Y forward from an earlier target price of Rs Rs 1,130. Its ‘Buy’ recommendation is based mainly on valuation though a near-term earnings vulnerability is not ruled out, the brokerage said.High LDR (loan-to-deposits ratio) and lower growth are negatives for the lender, Nuvama said. Commenting on its Q3 show, Axis delivered in-line NII and NIM while reporting a miss on core PPOP. The PAT was also in-line on higher trading gains in Q3FY24.
“Given LDR at above 90%, little room for LCR to fall and the CEO’s comment on deposit challenge, we see slower loan growth in FY25E.
With a higher share of bulk deposits and sharp increase in repo-linked loans, NIM could be vulnerable,” the brokerage said.
Motilal Oswal: Neutral | Target: Rs 1,175
While Axis Bank’s Q3 earnings were in-line with estimates of Motilal, the brokerage has cautioned investors on growth and NIMs front. “We cut our FY25E EPS by 8% considering an increase in costs and margin pressures. Moreover, with a high CD ratio of 93%, we estimate Axis Bank to deliver a 15.7% CAGR in loans over FY24-26E, slower than peers’,” Motilal said in a post-earning stock review note.
It has downgraded its rating to Neutral with a revised target price of Rs 1,175.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
