Shares of lender Axis Bank Ltd rise as much as 4.8 percent to Rs 676.50 – its biggest intraday percent gain in 5 weeks after the bank appoints Amitabh Chaudhry as its managing director (MD) and chief executive officer (CEO) for 3 years from January 2019, replacing Shikha Sharma who remained at the helm for nine years.
Nomura says appointment marks the beginning of many transitions in the CEO role in private banks over next 1-2 years. Chaudhry’s appointment is very positive for Axis given his diverse experience and technology/innovation leadership that he aided HDFC Life to achieve, Nomura added.
Key near-term uncertainty concerns a potential asset quality clean-up at Axis over next 2-3 quarters, Nomura adds; maintains “buy” rating.
Citi says once Chaudhry assumes charge, probability of Axis getting into life insurance manufacturing goes up.
Any changes that Chaudhry would want to implement once he assumes charge, like management changes or change in strategy, will take time to play out as Axis is a large bank, Citi added.
Macquarie expects RBI’s mandated top priority for Chaudhry would be to clean up the books and focus on resolving incumbent stress. This coupled with any potential change in top management, especially department heads, could see a decision-making vacuum, causing growth to take a back seat for a few quarters.
Macquarie maintains “Outperform” rating with target price of Rs 639.05, while Citi remains “neutral” with target price of Rs 610. 24 of 47 brokerages rate the stock “buy” or higher, 16 “hold” and 7 “sell” or lower, according to Thomson Reuters data.
Shares traded at Rs 654.25, up by 1.41 percent on the BSE at 1.47 pm.
The BSE Sensex traded 360 points or 0.94 percent lower to 38,029. The NSE Nifty50 traded at 11,470, down by 118 points or 1.02 percent.