Axis Bank raises Rs 10,000 cr via QIP; allots 23.8 cr equity shares to institutional investors

Private sector lender Axis Bank has managed to raise Rs 10,000 crore through its Qualified Institutional Placement (QIP) issue that closed yesterday. Axis Bank informed the stock exchanges that its Committee of Whole-Time Directors has approved the allotment of 23,80,38,560 Equity Shares at a price of Rs 420.10 per equity share to Qualified Institutional Buyers. The issue price is at a 5% discount to the floor price of Rs 442.19 apiece. Axis Bank shares were trading over 2% higher on Tuesday at a price of Rs 440 per share.

“The committee of whole-time directors of the bank at its meeting held today (Tuesday), has considered and approved the allotment of 238,038,560 equity shares at a price of Rs 420.10 per equity share (including a premium of Rs 418.10 per equity share),” Axis Bank said in a regulatory filing. The private lender is in line with other banks that have been recently raising funds. RBI, earlier last week said that it had asked the banks to conduct stress tests and raise capital to gear up to tackle any headwinds that emerge in the near future. 

Axis Bank’s board had last week launched the Rs 10,000 crore QIP. “We have received great response from global and local investors alike, and I am grateful to them for their continued faith in the Axis Bank franchise,” said Amitabh Chaudhry, MD & CEO, Axis Bank. The private bank took up capital raising to shore-up funds to enhance its capital adequacy in accordance with regulatory requirements. Management of the bank said that it is well placed to leverage all the possible growth opportunities that will come in as the economy opens up and is in a strong position to combat the challenges that emanate from the coronavirus pandemic. 

“Currently, Axis bank trades lower valuation compared to the historical average.  Lower valuation, increase in Capital adequacy ratio, and improvement in the AMC business would be positive for Axis Bank,” Jaikishan Parmar, Sr. Equity Research Analyst, Angel Broking told Financial Express Online. Parmar adds that the fundraising will be positive for Axis Bank at the current juncture. “At base price Tier I to increase approximately 150 basis points, net worth to gain 11.6%, and Book value to increase by 2.9%. In uncertain times adequate capital adequacy (CAR) will provide comfort to investors,” he added.

The moratorium book of Axis Bank declined sharply to 9.7% of total loans. The lender saw 90% of Moratorium 2.0 customers migrate from Moratorium 1.0. Brokerage and Research firm Motilal Oswal has a BUY rating on the stock expecting an upside of close to 36% to a target price of Rs  600. Pursuant to the allotment of Equity Shares in the Issue, the paid-up equity share capital of Axis  Bank stands increased from Rs. 5,64,40,54,948 to Rs. 6, 12,01,32,068.