Axis Bank Shares Soar 4% on Strong Q2 Earnings  Axis Bank reported another lackluster quarter, with credit growth declining to 11% year-on-year. Increased slippages and write-offs resulted in higher provisions, including contingent provisions. However, the bank saw a 10% beat in profit after tax (PAT) at ₹69 billion due to increased treasury gains and a favorable tax judgment. The moderation in credit growth was primarily due to a contraction in the low-yielding corporate and retail segments, including housing, vehicle finance, and personal loans.

In terms of asset quality, the bank noted that stress in unsecured loans remains high, but it is optimistic about improvements in the second half of the fiscal year. Regarding the recent draft guidelines on overlapping business between banks and NBFC subsidiaries, Axis Bank plans to seek clarification from the RBI. With a lower CET 1 ratio of around 14%, the bank intends to raise capital when the timing is right.

Considering the slower credit growth and higher loan loss provisions, we have adjusted our earnings estimates downwards by 1-4% for FY25-27. Nevertheless, we maintain a BUY rating with an unchanged target price of ₹1,400, valuing the standalone bank at 1.8x the September 2026 estimated adjusted book value, with subsidiaries valued at ₹100. The long-awaited extension of the Managing Director and CEO’s term by the RBI will be closely monitored in the near future.

 

Axis Bank Shares Soar 4% on Strong Q2 Earnings Shares of Axis Bank rose over 4% on Friday (October 18) to ₹1,180 per share following a strong Q2 performance. The bank reported a net profit of ₹6,918 crore, driven by robust core lending income and strong credit demand, leading brokerages to issue positive ratings on the stock.

Morgan Stanley gave an ‘Overweight’ rating with a target price of ₹1,445 per share, noting that Axis Bank had underperformed after Q1 due to asset quality concerns, but the situation improved in Q2. Credit costs dropped significantly quarter-on-quarter, and the bank utilized one-off gains to enhance its contingency provisions. While core revenue growth was subdued, Morgan Stanley anticipates improvement as deposit growth accelerates in the coming year.

Nomura also issued a ‘Buy’ rating with a target price of ₹1,380, stating that Axis Bank had a steady quarter despite muted expectations. Loan and deposit growth were modest but aligned with market forecasts. Lower net slippages and higher write-offs contributed to a decrease in gross non-performing loans (NPLs). Treasury gains offset weaker core pre-provision operating profits (PPOP), and the bank used one-off tax gains to strengthen its provision buffers. Nomura views the risk-reward profile as favorable, valuing the stock at 1.6x FY26 book value per share (BVPS) with a return on equity (RoE) of 15-16%.

Axis Bank Shares Soar 4% on Strong Q2 Earnings  Macquarie maintained its ‘Outperform’ rating with a target price of ₹1,400, acknowledging growth concerns but highlighting tax write-backs and treasury gains as key contributors to the positive surprise in profit after tax (PAT). While the balance sheet was bolstered by contingency buffers, Macquarie remains focused on how Axis Bank manages future incremental stress.

Notably, Axis Bank reported an 18% year-on-year increase in net profit for Q2 FY25, with operating profit surging by 24% year-on-year. The bank’s net interest income (NII) grew by 9% to ₹12,234 crore, and its net interest margin (NIM) stood at 3.99%.