Axis Bank shares rallied 6 per cent on Friday as its net profit grew 18 per cent y-o-y on a standalone basis to ₹6,918 crore in Q2FY25. Brokerages have been bullish on the stock for its soft business growth and steady asset quality, while some have cut target prices.
Global brokerage Morgan Stanley has maintained overweight call on Axis Bank at a target price of ₹1,445 apiece, highlighting that the bank’s asset quality improved in Q2. Macquarie and Bernstein have given ‘outperform’ ratings at ₹1,400 and ₹1250 target prices, respectively.
Yes Securities observed Axis Bank’s sequential loan growth was sluggish, but the management guided for improvement in second half. Sequential decline in net interest margin was driven by the absence of interest on income tax refund, it said. The brokerage believes that the bank will build on return on assets (RoA) going forward. It has reiterated ‘buy’ rating on the stock at a revised target price of ₹1,475.
Reiterating ‘buy’ call at a target price of ₹1,456, Elara Capital said that Axis Bank has hinged on the strategy to strengthen fundamentals. The brokerage noted that volatile performance has undermined valuation and near-term concerns plus softer aspects would feed into a delayed rerating, but higher discount to peers and the recent underperformance render the risk-reward favorable.
Gross slippages were higher as stress in unsecured retail continued. PL Capital has cut loan growth by 2 per cent /1 per cent in FY25/26E. It has retained ‘buy’ call at a revised target price of ₹1,530 from ₹1,425.
Another domestic brokerage JM Financial, which maintained positive stance on Axis Bank, has issued a buy call at a target price of ₹1,425.
Emkay Global has retained ‘buy’ rating at an unchanged target price of ₹1,400, and trimmed the earnings estimates by 1-4 per cent over FY25-27. “The long-awaited MD and CEO term extension by the RBI will be keenly watched in the near term,” Emkay added in its report.
Nomura has maintained buy rating at a target price of ₹1380 per share.
Analysts of HDFC Securities argued that the bank faces a steep balancing act in overcoming its deposit handicap, while also managing growth, given continued elevated stress in unsecured retail segments. They have maintained ‘add’ call at a revised target price of ₹1,250 on the stock.
Key concerns, slash in TP
Analysts of ICICI Securities expect strong business seasonality for Axis Bank in H2 and build in 5/4 per cent q-o-q growth for next two quarters in deposits/advances.
ICICI Securities, maintaining buy call, has cut target price of ₹1,350 from ₹1,430 earlier.
Nuvama Institutional Equities has slashed the target price to ₹1,335 and maintained its buy rating eased over asset quality. However, valuations offer downside comfort, it added.
Reiterating its ‘neutral’ rating at a target price of ₹1,225, Motilal Oswal believes that while the current valuation looks comforting after a significant underperformance, the watchful stance on several key metrics (deposit growth, credit cost, LCR & CD ratio) will limit near-term stock performance.
Citi has maintained neutral stance at a revised target price of ₹1,290.
Axis Bank shares ended 5.75 per cent higher on the NSE at ₹1,196.95. On the BSE, the stock closed 5.57 per cent higher at ₹1,195.25. Nifty Private Bank gained 1.90 per cent to 25,984.10, and Nifty Bank index rose 1.57 per cent to 52,094.20 on Friday’s trade.