Axis Bank or Kotak Mahindra Bank: Which stock to buy post-Q1 results?

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Analysts of Dalal Street retained their bullish views on private sector lenders Axis Bank and Kotak Mahindra Bank after they released their June quarter results. Axis Bank posted a 94% year-on-year growth in net profit at Rs 2,160 crore while Kotak Mahindra Bank reported 31.99% YoY growth in net profit at Rs 1,641.92 crore in Q1FY22. Shares of Axis Bank traded 2.47% lower at Rs 737.50 at around 12.30 pm (IST). Kotak Mahindra Bank was down 1.57% at Rs 1713.05 at around the same time.

Brokerages views

Emkay Global Financial Services is bullish on Axis Bank with a 12-month price target of Rs 960, indicating an upside of 30% from the current market price.

“The bank has undergone a major transformational journey, fortified the balance sheet and revved up the digital banking platform. We believe it is now ready to accelerate growth and deliver better return ratios,” the brokerage said.

On the other hand, Emkay holds a ‘Buy’ call on Kotak Mahindra Bank with a target price of Rs 2,000.

“We cut FY22-24E EPS by 3-5% but expect the bank to deliver a strong return on assets (RoA) of around 1.9-2%. RoE should also improve gradually to 12-13% in FY22-24E on a steady increase in leverage, with the bank showing an intent to grow,” Emkay said in a report.

Point to note

Edelweiss Securities sees more than 22% upside in Kotak Mahindra Bank.

“The bank’s strong foundations — liability franchise, capital, limited stress — form a perfect launching pad. Non-banking subsidiaries are also scaling up steadily (life insurance posted one-off losses this quarter),” it said.

Commenting on Axis Bank, it added that the private sector lender’s Q1FY22 surpassed its estimates on higher revenue traction and controlled credit cost. “Excess provisioning and the strong capital base goes a long way in increasing perceived equity sanctity,” Edelweiss said while retaining the ‘Buy’ call on Axis Bank with a target price of Rs 870.