Axis Bank shares slip 3% as govt to sell 1.55% stake via OFS

Mumbai: Shares of Axis Bank traded 3.14% lower on the first day of the government’s offer-for-sale (OFS) of 1.55% stake in the lender via Specified Undertaking of the Unit Trust of India (SUUTI).

Axis Bank was currently around ₹846 apiece against its previous close of ₹874. The delivery to traded volume stood at 65% with 44.9 lakh shares of the 69 lakh shares changing hands so far.

SUUTI will sell 4.65 crore shares in the private lender at ₹830.63 apiece, amounting to 1.55% stake over November 10-11, thus exiting the bank completely.

The sale at that price will fetch ₹3208.5 crore for the government. Only non-retail investors will bid on the first day of the OFS. Retail investors will bid on Friday.

Only registered mutual funds and insurance companies shall be allocated more than 25% of the OFS.

The shareholding was transferred to the investment vehicle in 2003 when a scheme of the Unit Trust of India failed and was bailed out.

Recently, US PE company Bain Capital sold half a percent stake in Axis for ₹1487 crore through an open market transaction.

Axis Bank rose 48% from a 52-week low of ₹618.25 on June 23 this year to hit a high of ₹919.95 on October 27, outperforming the Bank Nifty which rose by 27% between high and low over the same period.

Axis reported a strong second quarter performance with net profit rising 70% year on year to ₹53.30 billion driven by lower provisions.

Assigning a buy rating on Axis with a price target of ₹1005, LKP Securities noted, “QFY23 marks the manifestation of sequentially higher NII (Rs104bn; 17% YoY and 6% QoQ) and 30% sequential increase in net profit at Rs53bn.”

“The future outlook of asset quality is at manageable level as the strong standard asset coverage (1.4% of gross loans) is likely to absorb delinquencies from restructuring. In view of adequate covid buffer, glimpse of growth rejuvenation and manageable restructuring pool, we recommend a BUY,” added LKP Securities.

The range for the stock in the current month is ₹800-900, accordingto to the sell positions of options traders.