Axis Bank shares fell 6% after the lender reported a disappointing set of Q1 FY26 numbers. While core income grew slightly, profits took a hit due to higher provisions and weakening asset quality.
For the June quarter, net profit dropped 4% year-on-year to ₹5,806 crore, down from ₹6,034 crore a year ago and sharply lower than ₹7,117 crore in the March 2025 quarter.
Net interest income (NII) saw a muted rise of 0.8% YoY at ₹13,560 crore. Total income stood at ₹38,321 crore, compared to ₹35,844 crore in the same period last year.
However, provisions jumped to ₹3,947 crore—nearly triple the previous quarter’s ₹1,359 crore—pressuring the bottom line.
Asset quality also showed strain. The gross NPA ratio rose to 1.57% from 1.28% in Q4, while net NPA increased to 0.45% from 0.23%.
Brokerages Report
CLSA maintained its ‘Outperform’ rating on the stock but revised its target price down to ₹1,350 from ₹1,400. It said that while NII and core operating profit were in line, profit before tax missed estimates due to higher-than-expected slippages and credit costs, which came in 25–30 basis points above expectations. CLSA believes the asset recognition move is a long-term positive, but earnings may remain under pressure in the near term.
Nuvama Institutional Equities took a more bearish stance, downgrading Axis Bank to ‘Hold’ and slashing the target price to ₹1,180 from ₹1,400 — implying a nearly 16% downside from earlier estimates. It cited a sharp miss on asset quality and weak margin performance as key red flags. Slippages of ₹8,200 crore were well above its ₹6,000 crore estimate, while NIM contracted by 17 basis points QoQ. The brokerage also lowered its FY26E and FY27E EPS estimates by 5% and 6%, respectively, and cut the valuation multiple to 1.7x FY26E book from 2x earlier, flagging persistent volatility and slower transmission of rate cuts compared to peers.
JPMorgan also downgraded the stock to ‘Neutral’ from ‘Overweight’, cutting the target price to ₹1,265. The global brokerage reduced its EPS forecasts by 9% for FY26 and 4% each for FY27 and FY28, citing elevated provisioning and worsening asset quality as reasons for the downgrade. The firm acknowledged the proactive move on NPAs but remains cautious about Axis Bank’s risk-reward profile, especially given its underperformance on asset quality versus some private banking peers.
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