Management envisages a shallow, “C”-shaped recovery in margins, gradually moving toward a target level of 3.8% over the next 15–18 months. Optimisation of the fee-to-assets ratio remains constrained in the near term, reflecting current business mix and market conditions, Citi added.
Following this, Citi Research reiterated its Neutral rating on the stock, setting a target price in line with the prevailing market level, signalling no upside from current levels. The international brokerage has pegged its price target at Rs 1,285 per share.
On the flipside, the management said that stress levels in the credit card portfolio are easing, while the personal loan book has largely stabilised. Importantly, management indicated that there are currently no visible stress signals emerging from export-oriented MSMEs.
Technical gross slippages are expected to exhibit some seasonal uptick in the third quarter, primarily driven by agricultural cash credit and overdraft facilities. However, management clarified that the impact is likely to be significantly milder than what was witnessed in the earlier stress cycle.
Management highlighted improving momentum in the corporate segment, led by stronger working capital utilisation and refinancing activity. The retail business is also showing signs of recovery, supported by pent-up demand, though management cautioned that the durability of this trend will need to be monitored over the coming quarters.
In Q2, Axis reported a steep 26% year-on-year (YoY) fall in its standalone net profit at Rs 5,090 crore in the second quarter, compared with Rs 6,918 crore in the previous quarter. The net interest income (NII) during the quarter rose marginally by 2% YoY to Rs 13,744 crore. The same stood at Rs 13,483 crore in the year-ago period.
The bank’s operating profit for the quarter fell 3% YoY to Rs 10,413 crore.
At about 11:30 am, shares of the company were trading at Rs 1,236, lower by 4% from current market levels. Axis Bank shares are up 16% on a year-to-date basis.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)