Analysts expect improvement in NIM for the coming quarters

Axis bank recently witnessed a decline in its net profit during the December quarter of the current financial year. This dip in the net profit has disappointed the investors. Looking at it as an opportunity, a host of brokerages have raised their targets on the stock. The market analysts have been able to find comfort in the way the Axis Bank has been able to identify stress assets and tried-to lower its impact. The Axis Bank at the same time has down low restructuring and growth for their retail loan books. They are expecting low-cost funding and improved net interest margin (NIM) in the next quarters of the financial year.

At this point, CLSA has been the most responsive and optimistic. It kept a target of Rs. 1000 for the stocks in question as it noted the core pre-provision operating profit being hit. The profit witnessed several falls that led them to witness the new low-stress formation during the quarter. The Antique Stock Broking saw the target for the stock at Rs. 750 as compared to the earlier target of Rs.600. Their vision of the target is based on the 1.8 times the FY23 had to expect book value along with valuing subsidiaries which stood at Rs. 50 per share.

A pursed decline in the cost of funds, an improvement in the secured retail, a low restructuring of customer assets at 0.4 percent, a 48-55 percent of reasonable cushion on the unrecognized stress is said to be driving some improvement in the outlook.

Edelweiss has set a new target of Rs. 770 from their earlier target of Rs. 600 for they have a belief that the excess provisioning and capital raise will help them move forward to increase the perceived equity sanctity. The Axis Bank and Kotak Securities are expected to be the first banks to get over the COVID-19 impact.


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