Buy Axis Bank; target of Rs 1400: Emkay

Emkay is bullish on Axis Bank has recommended buy rating on the stock with a target price of Rs 1400 in its research report dated July 25, 2024.

Broker Research

July 26, 2024 / 15:51 IST

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26 Aug, 2025 12:21

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Emkay's research report on Axis Bank

Axis Bank logged a 10% earnings miss, with PAT/ROA lower at Rs60bn/~1.6% mainly due to LLP being higher (0.9% of loans) on account of higher NPAs/slower recoveries, and partly offset by lower opex. Credit growth was relatively moderate, but better LDR, rising share of unsecured loans, and a oneoff interest on IT refund helped Axis report flattish NIMs at 4.1%. The mgmt believes the higher NPA formation/LLP was a one-off and should trend down; this along with moderating cost (with the Citi integration pain largely behind) should help offset any margin/LLP pressure. Building-in the 1Q miss amid rising noise on unsecured loans and thus LLP, we cut FY25-27E earnings by ~3%. But we still expect the bank to report healthy RoA of ~1.8%. With CET 1 below 15%, the bank has taken an enabling resolution to raise equity capital to around Rs200bn; this should hence keep RoE in check.

Outlook

We retain BUY on Axis Bank and TP of Rs1,400/sh, rolling-over to 1.9x Jun-26E ABV (2x FY26E ABV earlier), and subs value of Rs90/sh. MD term extension by the RBI will be keenly watched.

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