Axis Bank's OFS opens for retail investors today. Should you subscribe?

 Nearly all the brokerages retained they 'buy calls on the stock post results with target prices as high as Rs 925

The government’s Rs 4,000-crore offer for sale (OFS) in Axis Bank received a warm reception by non-retail investors on Wednesday as the issue got over-subscribed by more than two times. The retail investors will get a chance to participate in the stake-sale process today, and analysts suggest they shouldn’t miss the opportunity.

“With this OFS, the hangover of SUUTI’s stake sale in the bank’s stock will ease which will reduce the volatility in the stock going forward and put it on the growth trajectory,” says Siddharth Purohit, equity analyst at SMC Global.

The government, via Specified Undertaking of the Unit Trust of India (SUUTI), has been paring its stake in Axis Bank through OFS for quite some time now. Last year, Centre had sold nearly 10 million shares of Axis Bank worth around Rs 600 crore as part of its stake sale strategy.

Under the current scheme, SUUTI will sell its 1.21 per cent stake or 36 million shares in Axis Bank with the floor price set at Rs 680 a share. Additionally, SUUTI also has an option to sell its 0.74 per cent or 22 million shares in the private sector lender. READ ABOUT IT HERE

As the government will be left with a bare minimum stake, investors may not have to worry about such intermittent volatility, says AK Prabhakar, head of research at IDBI Capital. “Because of the overhang, the bank’s stock has not been performing too well at the bourses. However, once this is over, the stock will scale to new heights. Thus, investors should participate in the OFS,” he adds.

Shares of the lender slipped over 1 percent on the National Stock Exchange (NSE) on Thursday and were trading around Rs 708 apiece. In comparison, the benchmark Nifty50 was down 0.4 per cent in early deals. So far in the current financial year, the stock of the lender has performed in line with the benchmark by adding 2.7 per cent on the NSE as against a 2.3 per cent gain in the Nifty50 index.