Neutral Axis Bank; target of Rs 1175: Motilal Oswal

Neutral

Motilal Oswal's research report on Axis Bank

Axis Bank (AXSB) reported 3QFY25 net profit of INR63b (up 3.8% YoY, in line) as lower opex offset higher provisions. In 9MFY25, earnings grew 8.6% YoY to INR192.6b, and we expect 4QFY25 PAT to come in at INR68.4b. NII grew 8.6% YoY/1% QoQ to INR136b (in line). NIMs moderated 6bp QoQ to 3.93%. Provisioning expenses stood at INR21.6b (higher than MOFSLe due to high loan loss-related provisions) as AXSB tightened its provisioning rules. Loan book grew 8.8% YoY (1.5% QoQ). Deposits grew 9.1% YoY (0.8% QoQ), resulting in a C/D ratio of 92.6%. CASA mix moderated to 39%. Average LCR increased 400bp QoQ. Fresh slippages increased to INR54.3b (INR44.4b in 2QFY25, in line). GNPA/ NNPA ratios inched up to 1.46%/0.35%. PCR stood at 76.2%.

Outlook

We cut our FY26E/FY27E earnings by 4-5% and estimate FY26E RoA/RoE of 1.6%/14.6%. While the near-term growth and asset quality performance may remain suppressed, reflecting the stress in the macro environment, we see limited downside risk from the current levels. Retain Neutral with a TP of INR1,175 (1.5x Sep’26E ABV).

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Axis Bank - 17012025 - moti