Axis Bank’s Q1FY26 earnings left global brokerage JPMorgan cautious, leading it to downgrade the stock to ‘Neutral’ from ‘Overweight’ while cutting the target price to ₹1,265, citing limited upside from current levels.
JPMorgan has also revised down its EPS forecasts by 9% for FY26, and 4% each for FY27 and FY28, attributing the move to higher-than-expected provisioning and weaker asset quality metrics.
In Q1FY26, Axis Bank posted a net profit of ₹5,806 crore, a 3.8% YoY decline, while net interest income (NII) grew marginally by 0.8% YoY to ₹13,560 crore. The pain point came from asset quality: gross slippages jumped to ₹8,200 crore from ₹4,805 crore sequentially, and gross NPAs spiked to ₹17,765 crore, leading to a Gross NPA ratio of 1.57%, up from 1.28% in Q4FY25.
Provisions surged to ₹3,948 crore from ₹1,359 crore QoQ, reflecting the bank’s decision to frontload risks. JPMorgan views the spike in slippages and credit costs as key factors behind its revised earnings outlook.
While management termed the increase in slippages as partly due to technical changes in recognition norms, JPMorgan remains cautious about the stock’s risk-reward, especially as Axis lags some private sector peers in asset quality stability.
