AXIS BANK A SURE SHOT AT A SHOT

Decline in profits plus a formation of Bearish pennant and Bearish Flag in short term. A quick 30-60 points to make on the chart.

Recent Financial Performance:

Profit Miss and Asset Quality Concerns: In the third quarter ending December 31, 2024, Axis Bank reported a 4% year-over-year increase in standalone net profit to ₹63.04 billion, which fell short of analysts' expectations of ₹65.16 billion. This shortfall was primarily due to a significant rise in provisions for bad loans, which more than doubled to ₹21.56 billion. Additionally, the gross non-performing asset (NPA) ratio increased slightly to 1.46%, indicating some deterioration in asset quality.

Loan Growth Slowdown: The bank's loan growth decelerated to 9% year-over-year, down from 11% in the previous quarter. This slowdown reflects a cautious approach amid rising asset quality concerns.


Analyst Perspectives:
UBS Assessment: UBS has expressed concerns about Axis Bank's rising non-performing loans and has adjusted its target price for the bank's shares to ₹1,210.

LKP Research Outlook: Contrastingly, LKP Research maintains a bullish stance, recommending a 'buy' rating with a target price of ₹1,228.

Market Performance:
Recent Share Movements: As of January 24, 2025, Axis Bank's stock closed at ₹959.85 per share, marking a 0.85% decline for the day.


Industry Context:
Regulatory Impact: The Reserve Bank of India's measures to curb retail lending have led to a slowdown in credit growth across the banking sector, resulting in increased provisions for bad loans and a rise in non-performing assets. This regulatory environment has adversely affected the profitability of several banks, including Axis Bank.