Watch out for asset quality in Axis Bank: Divyanshi Dayanand, SBICap Securities

In an interview with ET Now, Divyanshi Dayanand, Banking Analyst, SBICap Securities, shares her views on the Axis Bank earnings. Excerpts:

ET Now: What is your assessment of Axis Bank’s second quarter earnings that we have got? The PAT has come in at Rs 1362 crore, it is up about 21% year on year basis. Q2 NII is at Rs 2936 crore. On the face of it, both these numbers are above what the street was expeting?

Divyanshi Dayanand: The profit figure itself is around 8% or 9% above our estimates. NII has come in line, but the key thing to watch out for is the overall asset quality because if you see there has been some deterioration sequentially. Management was guiding some sort of gross NPA figure coming up. That is what one needs to look out for.

ET Now: As a house, what is it that you are recommending on the Axis Bank stock price?

Divyanshi Dayanand: We have a buy rating call. So we might be revising our target price for now because given the dilution that one might see in terms of the asset quality, we need to price in a bit higher credit cost. So possibly we will bring down the target price from the current 1700 to maybe closer to 1500 levels.