Axis Bank shares fall over 9% after bleak Q2 earnings

Axis Bank shares fall over 9% after bleak Q2 earnings

While retaining buy call on the stock, Bank of America Merrill Lynch cut its target price to Rs 590 from Rs 650 per share and estimated Rs 12,000 crore of further new slippages in second half of FY18.

CLSA also slashed its target price on the stock to Rs 612 from Rs 620 per share following lower earnings estimates, but maintained buy call as it expects asset quality/earnings to normalise. Equity dilution is likely in coming quarters, it feels.

It, however, reported a spurt in retail and agriculture loans slipping into the non-performing assets category due to a slowdown and expectations of farm loan waivers. Deutsche has reduced its earnings estimates by 13/7 percent for FY18/19.

The core net interest income rose 23.79 per cent to Rs 898.81 crore courtesy a 25 per cent surge in the loan book which included a 35 per cent rise in corporate advances, but the other income grew only marginally to Rs 287.22 crore.

Shares of Axis Bank might witness a sharp fall today after the bank's net profit for Jul-Sep was below analyst' estimates, as well as bad loans have increased. The net NPA ratio too rose to 3.12 percent against 2.3 percent quarter on quarter.

Gross bad loans as a percentage of total loans stood at 5.90 per cent in the quarter, compared with 5.03 per cent a quarter earlier and 4.17 per cent a year earlier Outstanding loans on the bank's watch list, or potential troubled loans, fell 24 per cent from the previous quarter to 60.52 billion rupees as of end-September.

In absolute terms, the gross NPAs shot up to Rs 27,402 crore at the end of September this year as compared to Rs 16,379 crore at the end of the second quarter of the previous year.

The stock slumped 9.52 per cent to settle at Rs 464.35 on BSE.