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    Axis Bank shares slip as Q3 net profit falls 36%: Should you buy, sell or hold?

    Axis Bank shares slip as Q3 net profit falls 36%: Should you buy, sell or hold?

    Axis Bank shares slip as Q3 net profit falls 36%: Should you buy, sell or hold?
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    By Ankit Gohel   IST (Published)

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    The share price of Axis Bank fell over 2 percent in early trade on Thursday after the bank’s standalone net profit in Q3FY21 declined 36.4 percent YoY.

    The share price of Axis Bank fell over 2 percent in early trade on Thursday after the bank’s standalone net profit in Q3FY21 declined 36.4 percent to Rs 1,116.6 crore from Rs 1,757 crore in the corresponding period of last fiscal.
    Net interest income grew by 14.3 percent to Rs 7,372.76 crore from Rs 6,452.98 crore, YoY, while loan growth was at 6 percent YoY.
    “Reported profits after tax for the quarter are adversely impacted to the extent of around Rs 1,050 crore on account of prudent expenses and provisioning charges during the quarter,” the bank said in an exchange filing.
    Provisions and contingencies increased 32.7 percent YoY to Rs 4,604.28 crore in Q3FY21. Specific loan loss provisions for Q3FY21 were Rs 1,053 crore, compared to Rs 2,962 crore in Q3 last year, the bank said.
    On the asset quality front, gross non-performing assets (as a percentage of gross advances) during the quarter declined 74 bps sequentially to 3.44 percent, while the net NPA dropped 24 bps QoQ to 0.74 percent.
    Axis Bank Q3 net profit drops 36% to Rs 1,117 crore
    Axis Bank’s 3QFY21 result was a big beat on asset quality with slippage of just Rs 67 billion and restructuring at just 0.4 percent of loans. The bank has 75 percent coverage of pro-forma NPAs and +60 percent coverage of non-NPA stress making the bank the best provided against any potential stress and should lead to credit cost normalisation in FY22 itself, CLSA said.
    Axis remains one of CLSA’s top picks and it is the best way to play a dual benign credit cycle for both corporate and retail loans from FY22CL, it said.
    Jefferies has maintained a 'buy' call and raised the target to Rs 840 from Rs 800 per share. The profit was below Jefferies’ estimates due to higher credit cost. Jefferies said that the growth in core operating profit and CASA was healthy.
    Citi maintained a 'buy' rating with a target of Rs 800 per share. The low restructuring and high provision buffer should imply lower credit costs for FY22, it said.
    JPMorgan is 'overweight' on the stock, with the target at Rs 710 per share. It cut F21 EPS by 14 percent but kept F22/23 largely unchanged. The brokerage assumes credit cost normalisation to 1.2 percent FY22 onwards.
    Macquarie has maintained an 'outperform' call on the stock with a target at Rs 780 per share. It raised earnings estimates by 8-12 percent for FY22-23 while Bernstein kept a 'market-weight' call on the company, with a target at Rs 530 per share.
    Yes Securities maintained 'buy' with a target price of Rs 775 per share.
    At 10:10 am, the shares of Axis Bank were trading 1.38 percent higher at Rs 640.60 apiece on the BSE as compared to a 0.62 percent loss on the benchmark Sensex.
     
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