Axis Bank shares fall over 3%. Should you buy after Q2 results?

The bank showed improvement on the asset quality front, as gross non-performing assets (NPAs) or bad loans stood at 3.53% of gross advances by the end of September this year, from 3.85% in the previous quarter. Net NPA stood at 1.08%.

During Q2, the decline in loans declined to 3.9% from 16% QoQ in the previous year and upgrades/recoveries were also better. According to Jefferies, this caused gross NPLs to fall from 7% QoQ to 3.5% of debt. “The moderation in slippage and low restructuring was positive,” the note said. The brokerage has maintained its buy rating on the bank’s stock and raised the target price. ₹1,020 (from ₹910).

Axis Bank said its net exposure to the two lending companies of the Srei Group, which were superseded by the Reserve Bank of India, was zero as they had fully provisioned for the account.

Another brokerage company Emkay has also increased the target price of Axis Bank. ₹1020 (from ₹960 first) as it maintains its buy position. “Despite slow growth, lower NIM and higher OPEX weight on PPOP (down 11% year-on-year), Axis reported beating PAT mainly due to vesting provisions,” it said.

Emkay said slow growth and high NPA formation due to the covid-induced disruption, and any indication of management volatility, which has eased slightly recently, could act as major risks to its calls.

People of Motilal Oswal. The purchase is maintained on the stock with a target price of ₹As of 975 its asset quality was stable, supported by higher recoveries and upgrades, while its slippage remains high. However, the brokerage is cautious about the improvement in the operating income of the bank.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.