Sharma’s re-appointment as the Managing Director & CEO of the bank was revised from June 1, 2018 up to December 31, 2018.
Shares of Axis Bank gained 5 percent intraday Tuesday after bank's MD & CEO Shikha Sharma’s term has been reduced to seven months from three years at her request.
Sharma’s re-appointment as the Managing Director & CEO of the bank was revised from June 1, 2018 up to December 31, 2018.
"Smt. Shikha Sharma, Managing Director & CEO of the Bank has requested the Board to reconsider the period of her re-appointment as the Managing Director & CEO of the Bank be revised from 1st June 2018 up to 31st December 2018,” bank said in a filing to the stock exchanges.
On December 8, 2017, the board of the third largest private lender had informed of its decision to re appoint Sharma as the MD & CEO, for a period of 3 years with effect from June 1, 2018, subject to requisite approvals.
The decision to reduce the term comes days after reports suggested the Reserve Bank of India had asked Axis' Board to reconsider Sharma's reappointment at the helm for the fourth term on the grounds of the bank's dwindling financial performance.
Brokerage: Macquarie | Rating: Outperform | Target: Rs 651
Macquarie maintained outperform rating on Axis Bank with a target of Rs 651.
According to broking house, the management transition needs to now be managed well and appointment of credible successor will be critical for bank’s performance.
There may be significant challenges to growth and operations, it added.
Brokerage: IDFC Securities | Rating: Neutral | Target: Rs 605
IDFC Securities maintained neutral call on Axis Bank with target of Rs 605.
IDFC Securities believes that change in the top management is positive in long run, while it do not see any positive earnings triggers in short term.
CEO change after 6 months is going to add to uncertainty and till that time most of the clean-up is done.
It expect short term pressure on asset quality and growth, while there is a possibility of the stress loan pool rising over reported levels.
Brokerage: Citi
According to Citi, the asset quality concerns could be an overhang, while upside capped till visibility on the new CEO.
Brokerage: CLSA
Successor will be key to stability/valuations and don’t see high risk of clean-up post new CEO, said CLSA.
At 13:42 hrs Axis Bank was quoting at Rs 541.30, up Rs 23.40, or 4.52 percent on the BSE.
Posted by Rakesh Patil