Motilal Oswal reiterates ‘buy’ rating for Axis Bank; sees 19% upside

Axis Bank has reported steady traction in retail business with the mix increasing to 58% in 1Q FY24 from 50% in FY19

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26 Aug, 2025 12:21

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Domestic brokerage firm Motilal Oswal has reiterated its ‘buy’ call for Axis Bank, saying the private sector lender’s strong retail franchise, business productivity and asset quality make it an attractive choice.

It has a target price of Rs 1,175 for the stock, which represents a potential upside of over 19 percent from its current level of Rs 982.

“Axis Bank has reported steady traction in retail business with the mix increasing to 58 percent in 1Q FY24 from 50 percent in FY19. This occurred even as the bank consciously lowered the share of mortgage in its retail mix to 43 percent from 47 percent in FY22,”Motilal Oswal said in a report.

The proportion of higher-yielding retail loans – comprising mainly personal loans, rural loans, credit cards, and small business banking (SBB) – has increased to 28 percent.

“The rural and semi-urban market remains a key focus area, which we believe should enable sustainable loan growth over the medium term,” it added.

Business per branch of Axis Bank has improved to Rs 3.7 billion in FY23 from Rs 3.2 billion in FY22, while business per employee has also improved to Rs 195 million in FY23 from Rs 178 million in FY22.

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The management has guided to add up to 500 branches in FY24, as it expects branches to play an important role in deposit mobilization from new customers.

Retail and transaction banking fees now form ~93 percent of total fees, signifying the granularity of fee income. This was primarily driven by card fees (up 51 percent YoY) and other retail assets related fees (up 23 percent YoY), which together constituted around 68 percent of total fees.

Axis Bank has also completed the acquisition of Citibank India’s consumer business, including its credit cards, deposits, wealth management, loans, and other retail banking operations. It has also acquired the NBFC business of Citicorp Finance (India).

Motilal Oswal further said the lender’s asset quality has improved significantly over the past few years, with slippages moderating to 1.9 percent in FY23 versus 8.2 percent in FY18, which led to a decline in the GNPA ratio to 2.2 percent in FY23 from 5.1 percent in FY20.

“Axis Bank remains focused on building a stronger, consistent, and sustainable franchise. With asset quality issues behind, slippages and credit costs are likely to stay under control,” it added.

Shares of Axis Bank are up 4 percent on YTD basis, though the 1-year return stands at 30 percent.

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