Brokerages cut target prices on Axis Bank after weak Q1 show

Several brokerages cut target prices on Axis Bank on Wednesday after the private lender posted lower-than-expected earnings for the June quarter.

Brokerages have cut target price by 2-10 per cent, but most have maintained a ‘buy’ rating. The stock fell 4.5 per cent to close at Rs 674.40 — its lowest closing in nearly two years as target price cuts by brokerages and weak performance in the June quarter weighed on sentiment.

The bank’s June quarter net profit climbed 95 per cent year-onyear to Rs 1,370 crore from Rs 701 crore posted for the same quarter last year, but the profit was lower than analysts’ estimates. “The key disappointments were higher slippage and the addition to stressed loans,” said CLSA. The brokerage lowered its target price by 10 per cent — the highest cut by any brokerage — on Axis Bank to Rs 900 from about Rs 1,000, saying that even though it expects earnings of the lender recovering from the current financial year, higher bad loans may delay it.


ICICI Securities, which trimmed target price by 7 per cent to Rs 865, said Axis Bank showed signs of the weak environment being reflected in slower growth and asset quality. Kotak Institutional Equities maintained a ‘reduce’ rating and lowered target price to Rs 700 from Rs 730 earlier.

“Axis Bank reported a flattish ‘BB and below’ book but indicated fresh exposures outside this, which was quite disappointing. This quarter has not been a great outcome though directionally one should see improvements coming through,” said Kotak Institutional Equities.