BackAxis Bank shares climb over 6% after December quarter results
Axis Bank shares hit a high of Rs412.40 in intra-day trade after the bank said it has taken into account the entire hit on bad assets
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Mumbai: Shares of Axis Bank Ltd climbed as much as 6.11% on Thursday after the bank said it has taken into account the entire hit on bad assets, following the Reserve Bank of India’s (RBI’s) asset quality review which asked banks to recognize and provide for stressed assets. The decision to recognize and declare these assets upfront gives clarity on credit quality at the bank, said analysts.
The stock touched a high of ₹ 412.40 in intra-day trade. Gains on the stock were the steepest since 28 February 2015. At 10.24am, Axis Bank was trading at ₹ 408 on BSE, up 5% from its previous close, while India’s benchmark index Sensex rose 0.3% to 24,134.30 points.
“Post the recent book cleansing with credit quality perspective much clearer now, retail asset focus and stronger deposit franchise would drive return on asset of 1.7% over fiscal year 2017-18 estimates," said Elara Capital in a research report.
On Wednesday, Axis Bank reported a net profit of ₹ 2,175.3 crore compared with ₹ 1,899.76 crore in the same period last year. Absolute gross non-performing assets (NPAs) were at ₹ 5,724 crore at the end of the December quarter compared with ₹ 4,451 crore in the previous quarter. As a percentage of total advances, gross NPAs rose to 1.68% as on 31 December, compared with 1.38% as on 30 September. Net NPAs at the end of the third quarter stood at 0.75%, up from 0.48% in the second quarter.
The bank said in a notice to the BSE that it has fully recognized the necessary impairment and the resultant provisioning impact of asset re-classification, as per RBI’s assessment, in this quarter.
“We have taken the full impact in this quarter. So, asset quality movement from here on would be organic," Shikha Sharma, chief executive of Axis Bank, told Mint on Wednesday,
Broking firm IDBI Capital has rated the bank to “buy" and increased its price target by 24% to ₹ 483 a share. Elara Capital also rated the stock with “buy" and increased its target price by 33% to ₹ 517 per share.
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