AxisBank Q4 Result Disappoints | IDEAL STOCK
While There Was No Doubt Among Experts About What Kind Of Numbers The Lender Had Reported, Their Approach Toward The Stock Is Quite Different From One Another's.
Shares Of Axis Bank Are Likely To Open Lower On Friday Morning As Investors Will Be Wary Of The Disastrous Set Of Results It Delivered For The March Quarter.
Multiple Experts IDEAL STOCK Spoke To Believe That The Stock
Could See A Lower Opening. However, That Does Not Necessarily Mean It Is An
Exit Point Or A Point Of Entry Either.
The Stock Closed 1 Percent Lower At Rs 494.55 On BSE Ahead
Of The Results Announcement Post Market Hours On Thursday.
While There Was No Doubt Among Experts About What Kind Of
Numbers The Lender Had Reported, Their Approach Toward The Stock Is Quite
Different From One Another's. Here Are Four Approaches One Could Have Toward
The Stock.
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Cheapest Corporate-Focused Lender
Sanjiv Bhasin Of IIFL Highlighted How, After The Correction
And The Likely Fall Ahead, Axis Bank Could Become The Cheapest Corporate Bank
In Terms Of Valuation.
“Axis Bank Has Managed To Deliver A Kitchen-Sink Quarter
Performance And Bring Out Everything (To The Table). These Were Largely Known
And Hidden…The Way It Has Happened Is Disappointing. The Stock Has Corrected
About 10-12 Percent And Has Been An Underperformer. We Will Have To Wait For A
Change Of Regime Now,” Bhasin, Who Is EVP—Markets And Corporate Affairs At IIFL,
Told IDEAL STOCK.
Speaking On The Outlook For The Stock One Year From Now, Bhasin
Said It Is Likely To Be In A Better Position. Classification Of Npas Has Been
Standardized By The Reserve Bank Of India, He Said, Adding That The Road
Forward Looks Smoother.
“On A Price To Book Basis, It Is The Cheapest Corporate Bank
As Well,” He Said.
Wait And Watch Approach
Meanwhile, Investors Could Also Adopt A Wait And Watch
Approach Instead Of Reacting In A Knee-Jerk Manner, Believes AK Prabhakar Of IDBI
Capital.
“Before Trying To Catch A Falling Knife, Investors Should
First Wait For A Rejig In Management. The Q4 Results Were Full Of Write Offs. Hence,
Wait Before You Start Buying Even Though It May Open Lower On Friday,” Said Prabhakar,
Who Is Head Of Research At IDBI Capital.
Look Outside! There’s More...
Having Said That, One Could Also Take A Look At Peers In The
Corporate-Focused Segment, Experts Said.
“…The Only Corporate Focused Private Bank We Hold Is Yes
Bank, Which Has Proved That Unarguably It Is The Best Managed Corporate Focused
Bank In Terms Of Its Scorching Pace Of Growth In Assets And Maintaining
Pristine Asset Quality In The Midst Of Spike In Soured Loans Among Its
Corporate Focused Rivals,” Ajay Bodke, CEO And Chief Portfolio Manager (PMS), Prabhudas
Lilladher, Told IDEALSTOCK.
A Word Of Caution
Lastly, Analysts Also Recommend Being Cautious About The
Stock Before You Rush To Buy It. Sanjeev Jain Of Ashika Stock Broking Said That
While The Results Did Disappoint, The Worst May Not Be Past.
“Wait Out Before You Plan To Buy The Stock Because We Don't
Know How Much Pain Is Still Left In Terms Of Asset Quality. I Think Investors
Should Avoid The Stock Until The Picture Is Clearer. It Also Reported Tax Write
Back Of Rs 1,300 Crore, Without Which The Net Loss Would Have Been Wider,"
Said Jain, Who Is Associate Vice-President At Ashika Stock Broking.
Case File
The Bank On Thursday Reported A Loss Of Rs 2,188. 74 Crore
For January-March, As Against A Net Profit Of Rs 1,225 Crore In The Same
Quarter Last Year.
This Is The First Ever Quarterly Loss Posted By Axis Bank Since
It Listed Over Two Decades Ago.
Slippages For The Quarter Nearly Quadrupled Year-On-Year To Rs
16,536 Crore, With Nearly Rs 13,900 Crore Of New Slippages Coming From The
Corporate Sector. So More Than 80 Percent Of The Slippages Were From Companies
Rated 'BB' And Below.
Analysts Polled By Reuters Had Estimated A Decline Of 56
Percent In Net Profit To Rs 534 Crore, And 4 Percent Rise In Net Interest
Income To Rs 4,909 Crore.
