Axis Bank rerating to continue on steady NIM

The bullish stance on the lender comes after its outperformance in March quarter

- NIKITA VASHISHT

Rerating of Axis Bank's stock may continue in the near future, believe analysts, as the riskreward on the stock remains favourable amid healthy financials.

The bullish stance comes after the Mumbai-based lender delivered a strong outperformance in the March quarter of the financial year 2023-24 (Q4FY24) on core pre-provision profit and net profit, with improving asset quality. Axis Bank's net interest margin (NIM) expanded, against expectations, even in a tough market. On the bourses, Axis Bank stock price surged 6.5 per cent to ₹1,133 apiece on the BSE in Thursday's intraday trade. The stock settled as the top gainer on the benchmark S&P BSE Sensex, and Nifty 50 indices with a gain of 6 per cent.

By comparison, the benchmark Sensex index closed 0.66 per cent higher.

"With the merger drag on HDFC Bank, ban on Kotak Mahindra Bank, and higher valuation for AU Small Finance Bank, we argue Axis Bank offers attractive riskreward, given its resilient NIM and cheap valuation," said Mahrukh Adajania of Nuvama Institutional Equities, in a coauthored note with Madhukar Ladha and Yashesh Gala. They value Axis Bank's stock at 1.8-times book value (BV) FY26E, assigning a target price of ₹1,270 to the stock, up 12.7 per cent from current levels.