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Buy Axis Bank at current level and at every dip: Siddharth Purohit, SMC Global Securities

Loan growth picked up on a sequential basis, YoY growth was up 14.5% and retail growth almost 23% up.

ET Now|
Oct 23, 2019, 10.04 AM IST
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We feel the bank is almost getting through its pain phase and FY21 should be looking much better in terms of asset quality and growth, says Siddharth Purohit, research analyst, SMC Global Securities. Excerpts from an interview with ETNOW.

What is your view on the Axis Bank numbers?
The reported numbers show a loss for the quarter, but one should understand that there was a one-time deferred tax asset which was adjusted to the tune of Rs 2,137 crore without which, it would probably have been a very strong pocket. Otherwise, the operating parameters for the bank was very satisfactory during this quarter.

Loan growth picked up on a sequential basis, YoY growth of 14.5% was very encouraging as is the retail growth of almost 23%, given the current environment where a lot of slowdown is visible in auto and other sectors.

As for asset quality, there were slippages on the higher side, close to Rs 5,000 crore odd, but there was a substantial reduction in the watch list also and that gives confidence to investors. Net-net asset quality has improved and I feel it is a very good quarter for Axis Bank from my point of view.

Would you look at entering the Axis stock at these levels?
For the last couple of quarters, we had been very conservative and we had kept our target at Rs 720. We have maintained a cautious stance but we have updated our target to Rs 790 and encourage investors to enter at the current level. Any weakness in the stock should be taken as an opportunity to enter because we feel that the bank is almost getting through its pain phase and FY21 should be looking much better in terms of asset quality and growth.

We have turned positive for the stock now and we recommend the stock at the current level with the target price of Rs 790.

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