Despite a broader market decline, Axis Bank's share price rallied 3% during Friday’s intraday trade, peaking at ₹1,201.10 on the BSE. The surge came after the Reserve Bank of India (RBI) approved the re-appointment of Amitabh Chaudhry as the Managing Director and CEO for another three-year term, from January 2025 until December 2027. This leadership continuity is seen as a positive factor for the bank’s long-term stability.
At 11:39 AM, Axis Bank shares were trading at ₹1,179.85, up 1%, while the BSE Sensex experienced a 0.86% drop. This rally in Axis Bank shares defied the overall market trend and has caught the attention of those looking to invest in stocks with strong leadership and consistent performance.
Recent financial performance boosts confidence
Axis Bank’s share price has been on a steady climb over the past six trading days, gaining 6%. The boost comes after the bank reported a robust 18% year-on-year (YoY) increase in net profit for Q2 FY25, amounting to ₹6,918 crore. This impressive performance was driven by strong growth in other income streams, including fees and trading income, making it an appealing option for those aiming to invest in stocks with high potential.
The bank's net interest income (NII) also saw a 9% YoY increase, reaching ₹13,483 crore, supported by healthy advances growth. However, the net interest margin (NIM) slipped slightly to 3.99%, down from 4.05% in the previous quarter and 4.11% in Q2 FY24. Despite this, Axis Bank's overall financial health continues to attract investors looking for opportunities to invest in stocks that show resilience in tough market conditions.
Asset quality and future outlook
Asset quality has shown significant improvement, with Axis Bank’s gross non-performing assets (NPAs) falling to 1.44%, down 29 basis points (bps) YoY and 10 bps sequentially. Net NPAs also declined to 0.34%, a positive sign for investors. Analysts believe that the bank is well-positioned to capture market share during the upcoming credit cycle, especially with its capital buffer, strong deposit franchise, and acquisition of Citigroup's India retail portfolio.
Brokerage firms like BNP Paribas and Elara Capital have recognised Axis Bank's potential. BNP Paribas sees the bank as a key player in the sector, highlighting its strategic initiatives, such as rural and small business banking (SBB). Their target price for Axis Bank is set at ₹1,550 per share, while Elara Capital maintains a 'Buy' rating with a target price of ₹1,456. For those aiming to invest in stocks with favourable risk-reward profiles, Axis Bank presents a strong case.
Analysts' views and recommendations
Analysts are optimistic about Axis Bank’s near-term and long-term prospects. They expect the bank to balance growth, net interest margins, and liquidity ratios despite potential short-term dislocations in credit-to-deposit ratios. However, the key risk remains the 'Higher for longer' interest rate environment, especially if rate cuts are delayed until mid-2025.
For those considering whether to invest in stocks now, Axis Bank offers a mix of stable leadership, strong financial performance, and improving asset quality, making it a smart choice in an otherwise volatile market.
Conclusion
Axis Bank’s 3% rally, despite a weak market, underscores its resilience and potential for growth. With strong financials, improving asset quality, and positive outlooks from leading analysts, Axis Bank is an attractive option for investors looking to invest in stocks with both stability and growth potential. As market conditions remain uncertain, the bank's ability to navigate challenges and seize opportunities could make it a standout performer in the financial sector.
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