Axis Bank shares surge over 4% following Q4 results, brokerages 'bullish' on outlook

Shares of Axis Bank rose over 4% on Thursday, April 25, buoyed by robust fourth-quarter financial performance. The lender reported a net profit of ₹7,130 crore for the fourth quarter of FY24. This marked a shift from the same period in the previous financial year when the bank posted a loss of ₹5,728.4 crore.

In response to the results, brokerage firms expressed bullishness about the bank's future trajectory.

Morgan Stanley issued an 'Overweight' call on Axis Bank, setting a target price of ₹1,450 per share.

The brokerage highlighted several key factors contributing to its positive stance.

"The bank's Profit Before Tax (PBT) exceeded expectations by 4%, driven by a decent performance in Net Interest Income (NII) and fee income. Additionally, despite prevailing liquidity challenges, Axis Bank demonstrated 5% quarter-on-quarter growth in average deposits," it said.

Notably, the Net Interest Income (NII) of the bank stood at ₹13,089 crore for the fourth quarter of FY24.

The bank saw total deposits grow by 13% year-on-year (YOY) and 6% quarter-on-quarter (QoQ) on the period-end basis, of which savings account deposits grew 2% YoY and 4% QoQ.

Morgan Stanley emphasised that the acceleration in deposit growth could serve as a significant catalyst for re-rating in the near future.

Brokerage firm Jefferies also expressed confidence in Axis Bank's prospects, issuing a 'buy' call with a target price of ₹1,380 per share.

The brokerage noted a 13% beat on profit estimates, primarily driven by improved Net Interest Margins (NIMs).

Despite softer loan growth projections for FY25, Jefferies predicted that efforts to enhance the Loan to Deposit Ratio (LDR) and margin expansion initiatives could offset some of the impact.

Additionally, Axis Bank's recent board approval for a ₹20,000 crore fundraise, equivalent to 13% of its net worth and representing a 6% dilution, was viewed as a strategic move.

While Jefferies slightly adjusted its estimates, it deemed Axis Bank's valuations, at 1.7 times FY25 adjusted price-to-book (PB) and 10 times price-to-earnings (PE), as attractive.