Axis Bank Share Price Target: Morgan Stanley Sees 25% Upside — What Does This Mean For Investors?
Morgan Stanley has raised its target price on Axis Bank Ltd., citing the turnaround story as the bank has taken significant additional steps over the past year and should get traction as the macro climate improves. In this article, we will delve into the details of this call and what it means for investors.
Target Price Raised to Rs 1,450
In its latest note, Morgan Stanley has raised its target price to Rs 1,450 from Rs 1,325 while maintaining an ‘overweight’ rating on the scrip. The stock is currently trading at Rs 1,161.40. This represents a potential upside of 25% from current levels, making it an attractive opportunity for investors.
Turnaround Story Gains Traction
The brokerage noted that the bank should get traction as the macro climate improves. ‘Expect re-rating relative to large private banks to be gradual,’ it added. This suggests that Axis Bank’s efforts to turn around its business are gaining momentum and should lead to a re-rating of the stock.
Key Drivers of Re-Rating
Morgan Stanley further added that ‘Expect trends in all three drivers – i.e., NIMs, growth, and credit costs – to turn positive.’ The key drivers for structural re-rating will be narrowing of retail deposit growth differentials and loan spreads versus large banks. This means that investors can expect Axis Bank’s profitability to improve as its net interest margins (NIMs) increase and credit costs decrease.
Benefits of Strategic Decisions Visible Over Next 2-3 Years
The brokerage highlighted that the benefits of the bank’s strategic decisions could be visible over the next 2-3 years. However, until then, expect the valuation gap to remain wide. This suggests that investors need to be patient and give the bank time to execute its turnaround strategy.
Investment Opportunities in Indian Banking Sector
The Indian banking sector has been a favorite among investors in recent years, with many banks outperforming the broader market. Axis Bank’s turnaround story is just one example of the opportunities available in this sector. Investors can also consider other banks such as HDFC Bank and ICICI Bank, which have a strong track record of growth and profitability.
Conclusion
In conclusion, Morgan Stanley’s ‘buy’ call on Axis Bank with a target price of Rs 1,450 is a positive development for investors. The bank’s turnaround story is gaining traction, and investors can expect a re-rating of the stock as the macro climate improves. However, investors need to be patient and give the bank time to execute its strategy. With the Indian banking sector expected to continue growing, Axis Bank is just one of the many investment opportunities available to investors.
