Following strong Q4 earnings, Axis Bank shares rise 6%. What should investors do next?

The declaration of a profit of Rs 7,130 crore for Q4FY24 by Axis Bank, a private lender, saw its share price soaring by about 6%. This was in sharp contrast to the loss of Rs 5,728.4 crore recorded in the same quarter of the previous financial year.

Net interest income (NII) increased by 11% YoY and 4% QoQ in Q4FY24, while profit after tax (PAT) increased by 17% QoQ to Rs 7,130 crores.

Additionally, for the fiscal year that ends on March 31, 2024, the board of directors proposed a dividend of Re 1 per share.

The private bank further said that the board has authorized the funding of Rs 55,000 using a combination of debt and equity. The lender intends to raise around Rs 35,000 crore of the overall authorized plan by issuing a range of debt instruments, including as long-term bonds, masala bonds, and sustainable debentures that are convertible either compulsorily or voluntarily.

The issuing of equity shares or similar instruments would be used to raise the remaining Rs 20,000 crore.

Is It Better To Buy, Sell, Or Hold?

On Axis Bank, Morgan Stanley

With a target price of Rs 1,450, Morgan Stanley has an overweight recommendation on Axis Bank in comparison to other international brokerages.

Lilladher Prabhudas on Axis Bank

Brokerage company Prabhudas Lilladher updated its target price for Axis Bank’s shares from Rs 1,250 to Rs 1,400 while maintaining its buy rating.

Prabhudas Lilladher said that Axis Bank continues to be their top choice since they anticipate a better Net Interest Margin (NIM) trend for FY24–26E. They predict that the core Return on Equity (RoE) and Return on Assets (RoA) will be 17% and 16%, respectively, by FY26E. The company points out that even with this optimistic forecast, the stock is already trading at a 29% discount to ICICI Bank, a difference they anticipate closing.

As they roll ahead to Mar’26 Adjusted Book Value (ABV), Prabhudas Lilladher maintains a valuation multiple of 2.2 times and raises their target price to Rs 1,400 from Rs 1,250.

Axis Bank’s JM Financial

The brokerage JM Financial maintained its target price of Rs 1,330 for Axis Bank’s shares and upheld its buy rating.

Axis Bank is one of JM Financial’s top recommendations, and it anticipates further possibilities for re-rating. They think this may be accomplished by steadily increasing deposit volumes while preserving asset quality and a favorable profit trajectory. Over FY25–26E, the brokerage company projects an average Return on Equity (ROE) of 17.2 percent and Return on Assets (ROA) of 1.8%, respectively.

Performance of Axis Bank’s shares during the last year

Axis Bank shares have performed well in terms of stock performance throughout a variety of time periods. The company has returned a respectable 6.29 percent over the last month, demonstrating its stability and development potential. Even more remarkable results over the last six months have been seen, with a notable rise of 15.63 percent, showing a strong rising tendency.

Axis Bank’s stock has increased by 2% so far this year, bolstering the company’s good momentum for the current fiscal year. Taking a more comprehensive view, the company has shown its continued growth and investor appeal with an outstanding return of more than 26% over the last 12 months.