Axis Bank (Axis) reported a mixed set of numbers with better-than-expected top line (strong growth and contained NIM pressure), though PAT at INR 50.9bn missed our estimates due to elevated provisioning (including a one-time standard asset charge). Loan growth rebounded to 5% QoQ; at 12% YoY, it is now ahead of the industry. Despite strong corporate growth, NIM outcomes (down 7bps QoQ) were better due to improvement in cost of funds. Gross slippages improved QoQ off a high base, though are still elevated. While reported credit costs remain elevated, core credit costs are showing improving trajectory.
OutlookThe bank mentioned improving asset quality trends in retail unsecured book. We increase our loan growth estimates to ~12% YoY for FY26E. Maintain BUY with a revised TP of INR 1,450.
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