Buy Axis Bank; target of Rs 1400: Geojit Financial Services

Geojit Financial Services research report on Axis Bank

In Q2FY26, Axis Bank’s interest income grew 1.8% YoY (-0.3% QoQ) to Rs. 30,970cr on increased disbursals across retail, SME and corporate segments. Interest expense rose 1.7% YoY (-1.6% QoQ) to Rs. 17,226cr. Net interest income grew 1.9% YoY (+1.4% QoQ) to Rs. 13,745cr. Net interest margin stood at 3.73% compared with 3.80% in Q1FY26, mainly due to the passthrough impact of repo cuts and lower loan yields. Axis Bank's total income grew 1.2% YoY (-1.9% QoQ) to Rs. 37,595cr, on higher income on investment and interest on balances with the Reserve Bank of India. The pre-provision operating profit fell 2.8% YoY (-9.6% QoQ) to Rs. 10,413cr because of higher operating expenses, which rose 4.9% YoY. The management said that NIM is expected to bottom out by Q3FY26, assuming there are no further rate cuts and the balance sheet mix improves.

Outlook

Advances are expected to grow around 300bps faster than the industry over the medium term, supported by technology, lead efficiency and prudent portfolio management. Therefore, we have retained our rating on the stock to BUY, with a revised target price to Rs. 1,400 based on 1.8x FY27E BVPS.

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