Shares of Axis Bank tumbled over 5 percent to Rs 1,099 apiece on July 18 after the lender posted a weak set of numbers for the June quarter. Profit and net interest income (NII) growth were muted, fresh slippages increased sharply owing to a technical impact, and margins contracted. Brokerages expressed disappointment over the Q1 performance and downgraded their ratings on the stock.
The Global Depositary Receipts (GDRs) of Axis Bank also tumbled 5 percent to $64.3 on July 18 after the bank's asset quality worsened during the June quarter.
Nuvama downgraded Axis Bank to "hold" and cut its target price to Rs 1,180 per share. The brokerage pointed out that Q1 margins (NIM) undershot expectations and the bank reported a big miss on asset quality. Core slippages and credit cost increased both quarter-on-quarter and year-on-year. Nuvama reduced its FY26 and FY27 earnings estimates by 5 percent and 6 percent, respectively.
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Motilal Oswal maintained a "neutral" rating with a target price of Rs 1,250 per share. The brokerage said Axis Bank plans to complete its clean-up exercise by Q2, which will keep near-term slippages and credit costs elevated. Residual loan re-pricing will continue to put pressure on margins, though the bank has reiterated its through-cycle margin guidance of around 3.8 percent.
Motilal cut its FY26 and FY27 earnings estimates by 8.6 percent and 5.7 percent, respectively, factoring in higher credit costs and margin pressure.
Meanwhile, Bernstein retained an "outperform" call with a target price of Rs 1,300 per share despite noting another weak quarter. It highlighted that earnings per share (EPS) fell 4 percent year-on-year, loan and deposit growth lagged at 8–9 percent year-on-year, NIM declined 17 basis points quarter-on-quarter, and asset quality deteriorated sharply even after technical adjustments.
As per the Q1 results declared by the private lender, its gross non-performing ratio rose to 1.57 percent as of June-end from 1.28 percent a quarter ago. Net NPA also rose to 0.45 percent from 0.33 percent in the March quarter.
The prudent application of technical parameters for recognising slippages and consequent upgrades impacted reported asset quality parameters, including provisions and contingencies for the quarter, the bank said, adding that the technical impact on profit was Rs 614 crore, return on assets was of 15 basis points and return on equities was 1.4 percent.
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