Shares of Axis Bank slumped over 4 per cent intraday after the bank reported a steep 21 per cent decline in net profit at Rs 1,555.5 crore in the June quarter.
The stock hit an intraday low of Rs 515.00, down 4.19 per cent on the BSE, but settled the day flat.
The Q1 earnings were roiled by a more than doubling of its bad loan provisions, higher operating expenses (opex) towards branch expansion and the resultant salary outgo.
"Axis Bank's results for the quarter remained disappointing with sharp rise in slippages. Though business growth remained strong sharp, there was a sharp 89 per cent rise in provisions. Though we were expecting provisions to remain high the reported number has been much higher than our expectations," said Angel Broking in a research note.
Post March quarter of FY16, the brokerage had an 'accumulate' rating on the stock and now the stock is trading above their target price.
"While on pure valuations terms the stock looks decently valued nearly 2 times its FY18E Adj BV, we are keeping the stock under 'under watch' rating.
Meanwhile, Chief Financial Officer Jairam Shirdharan said all the provisions, including an additional Rs 115 crore towards AQR accounts identified by RBI last December, have been met through the balance-sheet only and that nothing has been from the Rs 3,000 crore contingency buffer created in the March quarter.
Asked whether the bank expects any negative surprises in the second quarter from the watchlist, Srinivasan said, "No. We are also not revising our NPA outlook for the September quarter."
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