Axis Bank Share Price: The stocks of private lender Axis Bank on Wednesday, December 21, hit a lifetime high. Axis Bank, the best-performing stock among private lenders this year has been backed by analysts who said that its valuations are likely to converge with those of ICICI Bank in a few months. Shares of Axis Bank, NSE: AXISBANK, opened at Rs 953.10 apiece on NSE, up marginally by 0.44 per cent from the previous close of Rs 949.75.
The stock has gained nearly 40 per cent in 2022. Three leading private sector banks, HDFC Bank, ICICI Bank, and Kotak Mahindra, gained 10.47 per cent, 22.93 per cent, and 2.93 per cent, respectively, in 2022.
What should investors do now?
Chandan Taparia from Motilal Oswal also recommended buying Axis Bank shares. He said that the chart set up and momentum is very good.
Taparia said that one can also trade in derivatives in Axis Bank. He said that the premium of Rs 960 Call option could double from the current level. The premium of 960CE quoted 9 at the time of filing this report.
“Axis Bank is an example as to how well they have worked on their IT capabilities. The stock has been grinding for a long time, it has started to perform after a very long time. Valuation-wise, it is at the lowest level in top 5 banking stocks. So the rally in the stock should continue going forward. The existing investors can hold the stock for now. Meanwhile, new investors can enter on 5-6 per cent correction,” said A K Prabhakar, head of research at IDBI Capital.
“After strong consolidation between Rs 700 to Rs 800, the stock has given breakout above Rs 820 and is now trading near Rs 950 level. We think it will show Rs 1000 level very soon,” suggested Ravi Singhal of GCL Securities while advising to keep a stop loss of Rs 925.
“Bank hit a lifetime high after a few analysts said its valuations are likely to converge with those of ICICI Bank. Axis Bank has strengthened both its asset and liability businesses over the past few years to deliver sustained improved performance. In comparison with ICICI Bank, it trades at 1.4 times its FY25 estimated core book value,” said Manoj kumar Dalmia, Founder and Director, Proficient Equities.
Axis Bank is currently in the middle of a transformational journey, which is largely centred on building granularity on both sides of the balance sheet (increasing quality of deposits) and re-wiring itself for a digital-first future (tech investments), as per analysts.
Domestic brokerage firm Sharekhan has maintained a Buy on Axis Bank and raised the price target to Rs 1140.
The brokerage firm said that Axis Bank has strengthened its franchise (both on the assets as well as liability side) over the past few years to deliver sustained improved performance over the medium term. It said that Axis Bank is now emerging as structurally a stronger franchise, which will continue to deliver consistent performance.
“On the back of this, the current valuation gap (Axis Bank trading at 1.4x its FY2025E Core BV) vs. Its core peer (ICICI Bank at 1.9x its FY2025E Core BV) is expected to narrow down over the next 6-12 months,” the brokerage firm said.
Sharekhan said that branch expansion will further accelerate growth. Also, the bank has started gaining market share on the Current Account and Savings Account (CASA) front, aided by leveraging digital ecosystem, focusing on corporate salary account acquisition, and cross-sell liability products to existing clients. Further, Citi Bank’s acquisition is expected to improve CASA ratio by 200bps.
Sharekhan sees the bank emerging as stronger in this leg of upcycle and valuation multiple inching higher closer to its peers.
Axis Bank is trading around 54 per cent higher from its 52-week low of Rs 618.25 apiece that it had hit on June 23, 2022. At current levels, the stock has a market cap of Rs 2.92 lakh crore.
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