Citi has upgraded Axis Bank to buy and raised its target price to ₹1,436 per share, citing another quarter of better-than-expected core earnings and improving return metrics.
The brokerage highlighted that Axis Bank delivered a 1.5% return on assets (RoA), supported by resilient asset quality and controlled credit costs despite typical agricultural seasonality. Gross slippages remained stable at 2.11% QoQ, reinforcing Citi’s view that underlying asset quality trends remain intact.
Reported credit costs came in below 80 basis points, while core credit cost adjusted for technical slippages stood at 0.7%, offering further comfort on risk normalization. While net interest margins (NIMs) contracted 9 bps QoQ, net interest income (NII) still grew 4% QoQ, beating Citi’s estimates and indicating balance-sheet strength.
Cost control was a notable positive, with employee expenses declining 7% YoY and 11% QoQ, aided by lower headcount and provision reversals. This helped improve cost-to-assets to 2.25%, strengthening operating leverage.
Citi noted that muted treasury gains and modest fee income growth partially offset the positives, but overall believes Axis Bank’s consistent core profitability and improving efficiency metrics justify the upgrade.
Disclaimer: The views and recommendations above are those of Citi. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
