Axis Bank Shares Hit One-Month Low After Management Sees Delay In Margin Recovery

Axis Bank shares fell over 4% on Tuesday hitting a one-month low after management sees margin recovery delay pulling down the Nifty Index.

Bank has said that the NIMs will now bottom either in the fourth quarter or the first quarter in the previous year versus earlier guidance of third quarter.

The management now forecasts a shallow, 'C'-shaped NIM trajectory towards a targeted 3.8% over next 15-18 months, bank told Citi Research.

Citi notes that Axis Bank is seeing improved traction in its corporate segment, while the retail segment is also showing signs of recovery, supported by pent-up demand.

Stress in the credit card portfolio is easing, and there is no visible stress emerging in export-oriented MSMEs. The brokerage expects technical gross slippages to show seasonal fluctuations in the third quarter.

Citi has revised its view on net interest margins, now expecting them to bottom out in either the fourth quarter or the first quarter of the next fiscal year.

Management’s focus remains on delivering positive operating leverage, with costs as a proportion of assets expected to trend lower, although optimisation of the fee-to-asset ratio remains constrained for now.

The scrip rose as much as 4.19% to Rs 1,231 apiece on Tuesday, the lowest level since Nov. 14. It pared gains to trade 3.97% lower at Rs 1,233 apiece, as of 11:06 a.m. This compares to a 0.49% decline in the NSE Nifty 50 Index.

It has risen 7.26% in the last 12 months and 15.91% year-to-date. Total traded volume so far in the day stood at 0.97 times its 30-day average. The relative strength index was at 58.06.

Out of 51 analysts tracking the company, 43 maintain a 'buy' rating and eight recommend a 'hold,' according to Bloomberg data. The average 12-month consensus price target of Rs 1,381.51 implies an upside of 11.9%.