Shares of Axis Bank hit an all-time high of Rs 923.70, up 1 per cent on the BSE in Thursday’s intra-day trade, gaining 3 per cent in past three days on stable outlook. The stock of private sector lender has surpassed its previous high level of Rs 919.95 touched on October 27, 2022.
Axis Bank is the third largest private sector bank in India with a balance sheet size of Rs 11.8 trillion crore as on September 2022. The bank has a large footprint across India with 4,760 branches. Retail and SME comprise around 69 per cent of total loans.
Analysts at ICICI Securities have ‘Buy’ rating on Axis Bank with a target price of Rs 1,000 per share valued at 2.3x FY24E adjusted book value (ABV). Focus on risk adjusted business growth and improving margin trajectory is seen aiding return ratios with sustainability of performance to drive valuation ahead, the brokerage firm said.
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Meanwhile, rating agencies CRISIL Ratings and India Ratings and Research (Ind-Ra) have assigned AAA ratings with a Stable outlook on Infrastructure Bonds of Axis Bank and reaffirmed other ratings.
“The overall ratings continue to reflect the bank’s strong capitalization and strong market position and its comfortable resource profile. These strengths are partly tempered by the average asset quality,” CRISIL Ratings said.
Supported by regular equity capital raised by via qualified institutional placements (QIP) and improved accruals, the capital ratios of Axis Bank have remained healthy, as reflected in tier 1 and overall capital to risk-weighted adequacy ratio (CRAR) of 15.75 per cent and 17.72 per cent, respectively, as on September 30, 2022 as against 17.54 per cent and 20.04 per cent, respectively, a year earlier (16.34 per cent and 18.54 per cent, respectively, as on March 31, 2022), the rating agency said.
The Stable outlook reflects Ind-Ra’s expectation that Axis’s reasonable capital buffers, strong provision coverage ratio (PCR) and additional provisions (which are not included in the PCR) would provide cushion against any near-term shocks. Although Axis reported the highest-ever profitability in a decade in FY22, further improvement on a sustainable basis in line with the management targets and successful integration of Citibank N.A.’s (Citibank; ‘IND A1+’) retail franchise while keeping customer and employee attrition to a minimum will be key monitorable over the near term, Ind-Ra said in rating rationale.
According to S&P Global Ratings, Axis Bank should be able to maintain its good asset quality, supported by stable macroeconomic conditions in India and the bank’s well-developed risk management. The stable outlook reflects the bank’s strong market position, ample capital buffers, and stable deposit base, the rating agency said.