Axis Bank downgraded to 'Sell' by MarketsMOJO, but still has strong fundamentals.

Axis Bank, a largecap private bank, has recently been downgraded to a 'Sell' by MarketsMOJO. This downgrade comes after the bank reported flat results in September 2024, with its operating cash flow at its lowest at Rs 6,460.68 crore and its profit before tax (PBT) less other income at its lowest at Rs 1,786.53 crore. Additionally, non-operating income accounted for a significant 79% of the bank's PBT.
Technically, the stock is currently in a mildly bearish range, with its technical trend deteriorating from mildly bullish on 12-Nov-24. Since then, the stock has generated a negative return of -2.3%. The Bollinger Band and KST technical factors also indicate a bearish trend for the stock.

In the last year, Axis Bank has underperformed the market, generating a return of 13.82% compared to the market's return of 24.46% (BSE 500). However, the bank has strong lending practices with a low gross NPA ratio of 1.54%. It also has a strong long-term fundamental strength, with a CAGR growth of 56.04% in net profits. This indicates healthy long-term growth for the bank.

With a ROA of 1.7, Axis Bank is currently fairly valued with a price to book value of 2.1. The stock is also trading at a discount compared to its average historical valuations. In the past year, while the stock has generated a return of 13.82%, its profits have risen by 17.9%. This gives the company a PEG ratio of 0.8, indicating that it may be undervalued.

Another positive factor for Axis Bank is its high institutional holdings at 84.99%. These investors have better capability and resources to analyze the fundamentals of companies, making their confidence in the bank a good sign for potential investors.

In conclusion, while Axis Bank has faced some challenges in the recent past, it still has strong fundamentals and a fair valuation. However, investors should carefully consider all factors before making any investment decisions.