Axis Bank trades firm after 22.5 mn shares change hands on NSE

Around 22.5 million shares representing 0.74 per cent of total equity of Axis Bank changed hands on the NSE in pre-opening deals.

Shares of Axis Bank were trading firm on the National Stock Exchange (NSE) in Thursday’s intra-day trade after over 20 million equity shares of the private sector lender changed hands via block deals in pre-opening deals, the exchange data shows.

The stock hit a high of Rs 989 and a low of Rs 979.15. At 09:19 AM; it was trading 0.4 per cent higher at Rs 981.35, as compared to 0.07 per cent decline in the Nifty 50. The stock had hit a record high of Rs 989.70 on Tuesday, June 13, 2023.

Around 22.5 million shares representing 0.74 per cent of total equity of Axis Bank changed hands on the NSE. The deal size is amounting of Rs 2,178 crore, the exchange data shows. The names of the buyers and sellers were not ascertained immediately.

US-based private equity firm Bain Capital was likely to sell a 0.7 per cent stake in Axis Bank, in the price range of Rs 964 to Rs 977.70 per share. The stake sale would be worth $267 million, CNBC-TV18 reported on Wednesday, citing sources.

In past one month, Axis Bank has outperformed the market by gaining 6.5 per cent. In comparison, the Nifty 50 index was up 1.8 per cent, while Nifty Bank index was down 0.5 per cent. In past one year, the stock price of Axis Bank has zoomed 50 per cent, as against 19 per cent surge in the benchmark index and 31.2 per cent rally in Nifty Bank.

Axis Bank is the third largest private sector bank in India with a balance sheet size of Rs 13.17 trillion as on March 2023. The bank acquired Citi consumer banking portfolio effective March 2023 for Rs 11,600 crore wherein around Rs 27,000 crore of retail assets and Rs 40,000 crore of liabilities have come on Axis Bank’s books. Accordingly, exceptional provision of Rs 12,489 crore was made in Q4FY23 P&L account.

After a sharp dip in RoA to a low of 0.8 per cent due to the hit on Citi’s portfolio acquisition in FY23, analysts at Emkay Global Financial Services expect the bank to report 1.8% RoA/18% RoE (inflated due to Citi’s acquisition goodwill w-off) on a merged basis (without factoring any equity dilution) over FY24-26E, owing to better growth/moderation in operational cost.

The brokerage firm retains its BUY rating on the stock with a target price of Rs 1,225, valuing the bank at 2x its FY25E ABV.