INSUBCONTINENT EXCLUSIVE:
Axis Bank rallied over 5 per cent on Tuesday after the private sector lender on Monday announced that its CEO Shikha Sharma will step down
The announcement came days after the RBI was reported to have expressed concerns about the lender giving her a three-year extension.
The
scrip closed at Rs 5.43 per cent up at Rs 546 against the previous close of Rs 517.90.
Promoters of Axis Bank decreased their holdings to
27.60 per cent as of March 31, 2018 against 28.04 at December 31 end, according to the latest shareholding data filed by the lender to stock
exchanges on Tuesday.
On the other hand, public holdings increased to 74.40 per cent from 71.96 per cent during the same period.
Here’s
how brokerages reacted to the issue:MacquarieManagement transition needs to now be managed well, failing which there could be near-term
challenges to operations and growth
More importantly, Macquarie believes the appointment of a credible successor will be critical for the bank’s performance ahead
The global financial services firm maintained ‘Outpeform’ on Axis Bank with a target price of Rs 651.
IDFC SecuritiesThe brokerage house
believes that change in top management is positive in the long run, as the new CEO would join at a time when most of the cleanup is done and
can focus on reviving earnings growth
But it would lead to short term pressure on asset quality and growth.
There is also a possibility of the stress loan pool rising over the
Also it will be important to know the profile of the new CEO who will join after Sharma’s term ends.
IDFC Securities maintained
‘Neutral’ view on Axis Bank and it does not see any positive earnings triggers in the short term
The CEO change after six months will add to uncertainty, it added in a report.
Kotak SecuritiesWhile the board has not identified a
successor just yet, Kotak expects the bank to continue its journey towards de-risking the business by strengthening the liability franchise
and increasing the share of retail and better-rated corporates.
“We find upside in the stock at current valuations, post recent
underperformance, leading to an upgrade to ‘ADD’ with unchanged target price of Rs 600,” the brokerage house said in a report.
CITIThe
global financial services firm said Axis Bank shares could remain volatile till CEO succession will be completed
Asset quality concerns could be an overhand for the lender and upside in shares is capped till there is a visibility on the new
CEO.
Nilanjan Karfa of Jefferies“We hope the new person is an outsider, allowing fresh thoughts and strategy and to reestablish old links
and rebuild credibility with investors," PTI said quoting the analyst.
