Axis bank shares hit 52-week high, surges 8% as net profit rises 70% in Q2

Axis Bank shares touched a new 52-week high, rising 8.41% to 895.70 on Friday, becoming the Sensex’s biggest gainer a day after the lender announced a better-than-expected 70% increase in earnings in the September quarter.

On the BSE, Axis Bank shares were last trading at Rs 893.20 per share, up roughly 8.11%.

The private lender recorded a 70% increase in its consolidated net profit for the September quarter, which came in at Rs 5,329.77 crore. This rise was driven mostly by margin growth and a considerable decrease in bad loan costs.

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The assets climbed by 14%, while the net interest margin improved by 0.57 percentage points to 3.96%, resulting in a 31% rise in core net interest income to Rs 10,360 crore.

A loss of Rs 86 crore on trading income, compared to profits of Rs 473 crore in the same period the previous year, decreased other income to a 4% increase of Rs 3,941 crore.

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“Business growth recovered in the quarter under review after a sequential decline in the previous quarter. Asset quality continues to improve, aided by moderation in slippages and healthy recoveries, and upgrades. Restructured book moderated further while higher provisioning buffer provides comfort,” said analysts at Motilal Oswal.

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“Buoyed by exemplary performance, we revise profit after tax for FY23/24 by 17%/11%respectively. We estimate Axis Bank to deliver FY24 return on assets/equity (RoA/RoE) of 1.8%/18.1% respectively. We reiterate our buy rating with a target price of Rs 975 (2.0x FY24 adjusted book value),” the brokerage added.

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Amitabh Chaudhry, the bank’s Managing Director and Chief Executive, said that the bank has already reached its year-end NIMs forecast, giving it some cushion and that the bank will now more carefully explore expansion opportunities while sustaining margins.