Axis Bank shares tank 5% post Q4 results! What should investors do now? 

Shares of private lender Axis Bank tanked over 5 per cent to hit an intraday low of Rs 739.10 in early trade on Friday after the bank reported mixed earnings for the quarter ended March 2022. 

Axis Bank on Thursday reported 54 per cent rise in standalone net profit at Rs 4,118 crore for the quarter ended 31 March, 2022 on strong growth performance across deposits and loans, improving return ratios. The lender had reported a net profit of Rs 2,677 crore in the year-ago period. 

The stock opened lower at Rs 769 against the previous close of Rs 779.95 on BSE. With a market capitalisation of more than Rs 2,20,000 crore, the shares stand higher than 100 day moving averages but lower than 5-day, 20-day, 50-day and 200-day moving averages. 

The net interest income – the difference between the revenue a bank earns from its interest-bearing assets and the expenses of its interest-bearing liabilities –  also grew 17 per cent YoY and 2 per cent QoQ to Rs 8,819 crore. Net interest margin (NIM) for Q4FY22 stood at 3.49 per cent. 

The lender's GNPA per cent came at 2.82 per cent, declined by 88 bps YoY and 35 bps QoQ, while NNPA per cent stood at 0.73 per cent, declined by 32 bps YoY and 18 bps QoQ. 

Brokerage house Motilal Oswal noted that Axis Bank delivered a mixed performance with net earnings picking up sharply, supported by lower provisions, even as margin declined and OPEX stood elevated. 

It added that the asset quality continues to improve, aided by a decline in slippages and higher recoveries and upgrades. Restructured book moderated further, while a higher provisioning buffer provides comfort. 

"We expect slippages to remain in control, enabling a sustained improvement in credit costs, though improvement in margin and cost ratios would be key to watch for. We expect AXSB to deliver a FY24 RoA/RoE of 1.6%/15.7%. We maintain our Buy rating with a target price of Rs 930/share (1.7x FY24E ABV+ INR111 from its subsidiaries)," it said. 

HDFC Securities also believes that Axis Bank delivered a mixed bag with earnings marginally ahead of estimates, driven by lower credit cost (60bps annualised). However, PPOP was impacted by moderation in loan growth/ margins and higher opex. 

"We trim our FY22/FY23E earnings estimates by 4-5% each to factor in higher cost-to-assets and maintain BUY with a revised SOTP-based target price of Rs 996 (standalone bank at 2.0x Mar-24 ABVPS)," it added. 

Yes Securities values the standalone bank at 2.5x FY23 P/BV for an FY23E/24E RoE profile of 14.8/16.6%. The brokerage house has a 'Buy' rating on Axis Bank with a revised price target of Rs 1050 per share. 

Dolat Capital highlighted that encouraging asset quality trends, healthy growth prospects, and high provision buffers continue to provide comfort. 

"We maintain 'Buy' with an unrevised target price of Rs 970, implying a 2.3x FY24E P/ABV multiple against RoA/RoE of 1.5%/16%. The stock currently trades at 1.8x FY24E P/ABV," it added.