Axis Bank Shares Surge 6% After Robust Q4 Earnings; What Should Investors Do Now?

Axis Bank’s share price surged nearly 6 per cent following the private lender’s announcement of a profit of Rs 7,130 crore for Q4FY24, a stark contrast to the loss of Rs 5,728.4 crore reported in the corresponding quarter of the previous financial year.

Q4FY24 net interest income (NII) grew 11 per cent YoY and 4 per cent QoQ, while PAT stood at Rs 7,130 crores, up 17 per cent QoQ.

The board of directors also recommended a dividend of Re 1 per share for the year ended 31st March 2024.

The private bank also announced that its board has approved raising of funds worth Rs 55,000 via a mix of debt and equity. Of the total approved plan, the lender will raise around Rs 35,000 crore through the issue of various debt instruments including long-term bonds, masala bonds, and sustainable, optionally/compulsorily convertible debentures among others.

The remaining Rs 20,000 crore will be by issue of equity shares or related securities.

Should You Buy, Sell Or Hold?

Morgan Stanley on Axis Bank

Among other global brokerages, Morgan Stanley has an overweight rating on Axis Bank with a target price of Rs 1,450.

Prabhudas Lilladher on Axis Bank

Brokerage firm Prabhudas Lilladher reaffirmed its buy recommendation on Axis Bank’s stock and revised the target price upwards to Rs 1,400 from Rs 1,250 previously.

According to Prabhudas Lilladher, Axis Bank remains their top pick due to expectations of a superior Net Interest Margin (NIM) trajectory over FY24-26E. They anticipate that by FY26E, the core Return on Assets (RoA) and Return on Equity (RoE) will reach 1.7 per cent and 16 per cent, respectively. The firm notes that despite this positive outlook, the stock is currently trading at a 29 per cent discount to ICICI Bank, a gap they expect to narrow.

Prabhudas Lilladher maintains a valuation multiple of 2.2 times and adjusts their target price to Rs 1,400, up from Rs 1,250, as they roll forward to Mar’26 Adjusted Book Value (ABV).

JM Financial on Axis Bank

Brokerage firm JM Financial reiterated its buy recommendation on Axis Bank’s stock and kept the target price unchanged at Rs 1,330.

JM Financial views Axis Bank as one of its top picks, anticipating further re-rating potential. They believe this is achievable through sustained growth in deposit volumes while maintaining a positive margin trajectory and asset quality. The brokerage firm forecasts an average Return on Assets (ROA) and Return on Equity (ROE) of 1.8 per cent and 17.2 per cent, respectively, over FY25-26E.

Axis Bank’s share performance in last one year

In terms of stock performance, Axis Bank shares have demonstrated positive returns across multiple time frames. Over the past month, the stock has given a commendable 6.29 per cent return, showcasing its stability and growth potential. The last six months have seen even more impressive results, with a substantial increase of 15.63 per cent, indicating a strong upward trend.

Year-to-date, Axis Bank shares have surged by 2 per cent, reinforcing the stock’s positive momentum in the current fiscal year. Looking at the broader picture, the stock has delivered an impressive return of over 26 per cent in the last twelve months, emphasizing its sustained growth and attractiveness to investors.