Accumulate Axis Bank; target of Rs 1270: Deven Choksey

Deven Choksey recommended accumulate rating on Axis Bank with a target price of Rs 1270 in its research report dated October 16, 2025.

Broker Research

October 17, 2025 / 11:16 IST

Accumulate

26 Aug, 2025 12:21

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Deven Choksey's research report on Axis Bank

In Q2 FY26, Axis Bank’s Net Interest Income (NII) came in at INR 137,446 mn, up 2% YoY and 1% QoQ, slightly below our estimate of INR 139,018 mn, reflecting modest loan growth amid a stable yield environment. Net Interest Margin (NIM) stood at 3.73%, down 7 bps QoQ and 26 bps YoY, yet above our expectation of 3.52%, supported by a 30 bps YoY and 24 bps QoQ decline in cost of funds. Non-interest income stood at INR 66,246 mn, down 1% YoY, led by strong fee income growth of 10% YoY (granular retail fees forming 91% of total), partially offset by lower trading gains. Pre-Provision Operating Profit (PPOP) was INR 104,125 mn, down 3% YoY and 10% QoQ, missing our estimate of INR 112,093 mn, primarily due to higher operating expenses (+5% YoY), including integration and technology-related costs. Provisions stood at INR 35,470 mn, up 61% YoY but down 10% QoQ, in line with our forecast (INR 35,485 mn). The quarter included a one-time standard asset provision of INR 1,231 mn for discontinued crop loan variants. PAT came in at INR 50,896 mn, down 26% YoY and 12% QoQ, below our estimate of INR 57,456 mn, driven by lower PPOP. Consequently, the PAT margin contracted to 16.4%, below our estimate of 18.0%. Annualized ROA/ROE declined to 1.23% / 11.1% from 1.84% / 17.6% YoY.

Outlook

Axis Bank’s core profitability remains solid despite transient headwinds from regulatory provisioning and PSLC costs. We expect NIMs to stabilize and credit costs to normalize in H2 FY26, supporting a rebound in RoA/RoE. With strong capital adequacy, improving asset quality, and sustained digital-led growth, the company is well-positioned to deliver above-industry growth with stable return metrics.. We value Axis Bank at 1.7x Mar’27 ABVPS, implying a target price of INR 1,270. We reiterate our “ACCUMULATE” rating on the stock.

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