Axis Bank bags optimistic brokerage calls on Q4 profit beat but stock sinks 4% on weak growth outlook

Weak net interest income and cautious guidance on growth tempered investor sentiment.

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Private lender Axis Bank Ltd.'s shares tumbled over four percent in early trade on April 25, as investors showcased their disappointment with the bank's earnings report for the fourth fiscal quarter.

Axis Bank reported a standalone net profit of Rs 7,118 crore in the March quarter of the previous financial year, marginally lower than Rs 7,130 crore in the corresponding quarter last year. However, the private lender beat estimates due to higher core lending income.

The Mumbai-based lender's total income rose 6 percent to Rs 38,022 crore in Q4FY25 as against Rs 35,990 crore in Q4FY24.

Net interest income - the difference between interest earned on loans and paid on deposits - rose 5.5 percent to Rs 13,811 crore. Gross non‑performing assets (NPAs) fell to 1.28 percent of advances from 1.43 percent a year earlier; net NPAs were down to 0.33 percent from 0.35 percent.

At 10 am, shares of Axis Bank were trading in the red, lower by four percent at Rs 1,158.5 per share.

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Axis Bank reported strong sequential, period-end loan and deposit growth and improving asset quality but NII growth was soft, noted brokerages. Further, Axis Bank acknowledged easing systemic liquidity, but did not provide quantitative guidance on growth or credit costs.

Axis Bank’s earnings beat our estimates on the back of lower credit costs benefitting from write-back of security receipts and recoveries in its wholesale portfolio, offset by lower-than-industry growth on both sides of the balance sheet, said HDFC Securities. "Axis Bank witnessed first signs of portfolio stability although delinquencies continue to remain elevated compared to its larger peers."

ICICI Securities noted, "Amidst impending pressure on loan yields, we expect growth to be relatively subdued in the near term, though it could see healthy recovery in CY27 from stable rates and easing liquidity conditions." The brokerage, however, maintained its 'buy' call, with a price target of Rs 1,400 per share.

Asset quality in CC has stabilised while PL will take a few quarters. "Delinquencies in newly underwritten loans are improving in case of both CC and PL, just that in CC the portion of new loans to total is higher. The bank has tightened asset classification on certain loans, which will lead to marginally higher credit cost and lower recoveries in FY26", said Nuvama Institutinal Equities, maintaining its 'buy' rating, with a target price of Rs 1,400.

Motilal Oswal believed the bank is becoming more stringent in classifying loans, which could affect slippages going forward. Additionally, given the rate cut, margins are expected to remain under
check.

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