Why Axis Bank Share Price is Falling

2022 saw a strong rise in banking stocks owing to several favorable factors.

High credit growth backed by a gradual improvement in asset quality, boosted investors' confidence in the industry.

Additionally, the recent quarter saw a significant rise in net interest margin (NIM), which went hand in hand with the loan growth. Floating loans were re-priced more quickly than deposits due to the RBI's interest rate hikes, which increased profits.

However, despite the sector's promising outlook, shares of one of the best banks in India, Axis Bank have fallen more than 3% in the past month.

Here is what caused a correction in this Nifty 50 stock.

Lofty valuations triggered profit booking

Shares of Axis Bank rose over 28% in a year, touching its lifetime high on 4 January 2023.

The bank saw an increase in market share on the CASA (current account and savings account) front aided by leveraging the digital ecosystem, focusing on corporate salary account acquisition, and cross-sell liability products to existing clients.

Further, the decline in the dollar index helped the rally even more by encouraging large corporations to return to India for credit. This helped the bank improve its margins.

The rally resulted drove the Price to Earnings (PE) multiple of Axis Bank to 15.2x.

This PE is higher than the banking industry PE of 8.4x, making it overvalued on the PE front.

Therefore, the recent correction could be a temporary dip due to profit booking.

Axis Bank has emerged as the top-selling stock in December 2022 with mutual funds selling shares worth Rs 13.3 bn. Also, in November 2022, the government sold its residual 1.55% stake in the private sector lender.

For more details, have a look at the latest shareholding pattern of Axis Bank.

Robust quarterly earnings

For the September 2022 quarter, the bank reported a 70% YoY rise in net profit at Rs 53.3 bn.

The strong growth in the bottom line was on the back of lower provisions. Provisions in the quarter under review fell to Rs 5.5 bn, as against Rs 17.4 bn a year ago.

Its net interest margin rose 57% YoY to 3.9% from the year-ago period. Its gross NPAs declined sharply to 2.5% from 3.5% in the year-ago period and from 2.7% in June 2022 quarter.

For the upcoming quarter, the bank is focusing on increasing its market share and growing its performance across all business segments.

How Axis Bank shares have performed recently

Axis Bank has declined 3.6% in the last five days and 3.7% in the month gone by.

The company touched its 52-week high of Rs 970 on 4 January 2022 and its 52-week low of Rs 681.2 on 23 June 2022.

About Axis Bank

Axis Bank is the third largest private sector bank in India.

It offers the entire spectrum of financial services to customer segments covering large and mid-corporates, MSME, agriculture, and retail businesses.

The bank also offers asset management and brokerage services through its subsidiaries.

It has been at the forefront of offering digital banking services to its customers and is adopting new technologies, such as the cloud, to improve the customer experience.

For more details about the company, you can have a look at Axis Bank's fact sheet and Axis Bank's quarterly results on our website.

For a sector overview, you can read our banking sector report.

You can also compare Axis Bank with its peers on our website:

Axis Bank vs HDFC Bank

Axis Bank vs ICICI Bank

Axis Bank vs Kotak Mahindra Bank

Axis Bank vs Yes Bank

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