Axis Bank shares gains 6 sessions in a row; hits 2-month high ahead of Q3 results

Mumbai: Shares of Axis Bank Ltd gained for the sixth consecutive session as they hit a two-month high ahead of its December quarter earnings on Thursday.

The stock gained nearly 10% since 10 January, while so far this year it gained 8.8%. In intraday trade, the stock touched a high of Rs 491.70 a share—a level last seen on 15 November 2016 and rose 0.6%.

According to 20 Bloomberg analyst estimates, the bank may report a net profit of Rs831.80 crore.

“Overall profitability of the banking sector will be optically better in 3QFY17 on account of healthy treasury gains on its bond portfolio, very low base (AQR in 3QFY16) and relaxation by the Reserve Bank of India or RBI on asset quality,” said brokerage firm Nirmal Bang in its 10 January report.

The yield on 10-year and one-year government securities eased significantly during the quarter by 30 and 28 basis points, respectively.

Due to demonetisation, the Reserve Bank of India has allowed an additional 90 days for downgrading the loans as sub-standard.

As a result, despite the increased pain in most segments of the economy, analysts do not expect any spike in reported delinquency during the quarter.

“We expect public sector banks are expected to report loan slippage of 3.1% while private sector banks may witness a slippage of 4.1%, which can be mainly attributed to front-loading of stressed asset recognition by Axis Bank and ICICI Bank,” Nirmal Bang report added.

Axis Bank