This Bank Hits All-Time High; What Should Investors Do?

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This Bank Hits All-Time High; What Should Investors Do?
Credit: © Reuters.

While the banking index Nifty Bank is just an inch away from making a new high, one of its constituents - Axis Bank (NS: AXBK ) touched a new lifetime high in today’s session. This private-sector lender holds a weightage of 11.51% and has a market capitalization of INR 3,62,550, making it the 4th largest bank in the country.

In the last 12 months, FIIs have increased their holdings from 47.86% to 53.84%, as of March 2024. Mutual funds have liquidated a bit of their holdings, from 23.06% to 22.67% in the same period.

The bank reported a record revenue and net income of INR 1,37,989 crore and INR 26,317 crore, respectively. In fact, the net income has been increasing at a 5-year CAGR of a mammoth 88.4%! That’s quite impressive considering the size of the bank.

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Today as the stock jumped to a new high, investors might be thinking about whether they should book profits or hold on for some more time. But before considering the valuations we see whether it is a portfolio stock or not. This is done via a comprehensive financial health check in InvestingPro which gives a score out of 5.

The higher the score the better the company is doing fundamentally. In any case, it should not be lower than 3. In this case, a score of 3, indicating good performance clears the first layer of check.

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The stock has only run up 27.8% in the last one year, and due to its staggering growth, there is still a decent valuation gap of 31%.

The fair value of the stock comes at INR 1,555 quite distant from the CMP of INR 1,187. In fact, out of all 5 financial models used to calculate the fair value, the least intrinsic value came from the P/B multiple, which was INR 1,152. This means all remaining 4 models are pointing to some upside.

Offer: You can get InvestingPro at a steep discount of up to 69%, for INR 216/month, for a very limited time. Investors are already taking advantage of such a mouth-watering price to ramp up their investing game. In case you are finally ready to up your investing journey, Click here before time runs out.

Click here Subscribe to InvestingPro now at a discount of up to 69%, for just INR 216/month and unlock the full potential of your investments.

Also Read: Unveiling the Power of Fair Value with InvestingPro+

X (formerly, Twitter) - Aayush Khanna

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