Mumbai: Shares of private sector lender Axis Bank Ltd on Wednesday slumped 9.4%, its biggest single day fall in nine years, as many brokerages cut the price target of the bank after its asset quality worsened in the September quarter.

The stock touched a low of Rs460 on the National Stock Exchange, a level last seen on 1 February, and fell as much as 10.18%.

The scrip closed at Rs465 on the NSE, down 9.38%, its maximum decline since 24 October, 2008, from its previous close. The NSE Nifty fell 0.23% to 10,210.85 points. So far this year, Axis Bank has risen 3.34%.

Other banks also fell. Dena Bank declined 5.8%, ICICI Bank Ltd 4%, Indian Bank 3.1%, Yes Bank Ltd 3%, State Bank of India 2.8%, Punjab National Bank 2.3%, IDFC Bank Ltd 2%, DCB Bank Ltd 1.7%, Bank of Baroda 1.6%.

Nifty PSU Bank fell 2.5% while Nifty Private Bank Index declined 1.6%.

The bank reported a profit of Rs432.38 crore compared with Rs319.08 crore a year ago and Rs1,305.60 crore a quarter ago. The bank was expected to post a net profit of Rs1,318.30 crore, based on a poll of 20 analysts by Bloomberg.

Axis Bank’s gross non-performing assets (NPAs) rose to Rs27,402.32 crore as on 30 September from Rs16,378.65 crore a year ago and Rs22,030.87 crore in the June quarter. At the end of September, gross and net NPA ratio stood at 5.90% and 3.12%, respectively.

The rise in bad loans was due to an annual exercise conducted by the Reserve Bank of India (RBI) that pointed out divergence in asset classification for fiscal 2017.

“The flow of bad loans is yet to normalize and frequent changes to analyze the stress book (management’s perspective) makes it a challenge to take a constructive view for there is a fear of the unknown. Our recent upgrade did factor high NPLs (non-performing loans) but the quantum reported this quarter is discomforting," said Kotak Institutional Equities, in a note to its investors.

The divergence in gross bad loans stood at around Rs5,630 crore at end March 2017, while divergence in provisions was at Rs1,318 crore. Gross slippages for the quarter was at Rs8,936 crore of which corporate slippages stood at Rs8,110 crore.

“Dismal asset quality took the sheen off of an otherwise operationally stable September quarter with over 16% loan growth and sustained momentum in retail franchise. Critically, slippage was not from up-fronting of stress from the watch-list, but due to divergence (pertaining to RBI’s annual inspection) and higher non watch-list slippages," said Edelweiss Securities Ltd in a note.

Edelweiss downgraded the stock to “hold" from “buy" and cut its target price to Rs545 from Rs638 earlier.

CLSA reiterated its “buy" on the stock and cut its target to Rs612 from Rs620 a share, BofAML retained its “buy" rating with a price target cut to Rs590 from Rs650, JM Financial maintained its “hold" rating but cut the target price to Rs475 from Rs500 a share, while Credt Suisse maintained its “neutral" rating with reduction in price target to Rs484 from Rs506 apiece.

Of the analysts covering the stock, 21 have a “buy" rating, 17 have a “hold" rating, while 13 have a “sell" rating, shows Bloomberg data.

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