Axis Bank shares fall over 4% despite 38% YoY jump in Q2 net profit. Why brokerages are revising target prices

Shares of Axis Bank dipped over 4% to Rs 1,232 on the BSE on Monday after the private lender reported a 38% year-on-year increase in standalone net profit to Rs 7,003 crore for the second quarter of FY27.

Axis Bank on Saturday released its Q2 FY27 results, reporting an increase in net profit from Rs 5,089 crore recorded in the corresponding quarter of the previous financial year. However, Q2 FY27 profit fell short of the average estimate of Rs 7,124 crore, according to LSEG-compiled data cited by Reuters. The lender’s net interest income (NII) rose 12% YoY to Rs 15,371 crore, while net interest margin for the quarter under review stood at 3.36%.

The company’s asset quality improved, with gross non-performing asset (GNPA) ratio falling 30 basis points to 1.16%, while the net NPA (NNPA) ratio fell 9 bps YoY to 0.35%. The net slippage ratio declined 30 bps YoY to 0.75%.


Also read | Axis Bank Q2 Results: Net profit jumps 38% YoY to Rs 7,003 crore, NII rises 12%

Axis Bank’s advances grew 23% YoY and 9% quarter-on-quarter (QoQ), the lender said in a regulatory filing. Its operating profit rose 6% YoY to Rs 11,083 crore in Q2 FY27, while core operating profit increased 11% YoY to Rs 10,998 crore.

Speaking about the company’s performance during the quarter, Axis Bank MD & CEO Amitabh Chaudhry said the lender built on its leadership in digital payments and secure banking while advancing its technology agenda through AI-driven innovation and strategic partnerships. “As customer expectations continue to evolve, our focus remains on building a franchise that combines innovation, trust and execution at scale,” he added.

Jefferies on Axis Bank share price

Jefferies maintained its ‘Buy’ rating on Axis Bank shares with a target price of Rs 1,700 apiece, implying around 32% upside potential, while naming the private lender among its top picks. The international brokerage said the company’s profit was ahead of its estimates, aided by better topline and lower provisions. Asset quality continues to improve. Better NIMs & lower credit costs can lift ROE next year.

“We raise core estimates, but also factor in a slight impact on bancassurance fees from FY28 - as clarity is awaited, we take 30% impact on bancassurance fees,” it said, adding the lender’s valuations offer a 30% discount to ICICI Bank and a 7% discount to HDFC Bank. Improvement in ROE can help rerate, it added.

Other brokerages on Axis Bank share price

Centrum Broking maintained its ‘Buy’ call on Axis Bank shares but reduced its target price to Rs 1,530 apiece from Rs 1,630 apiece. The latest target price implies nearly 19% upside from the stock’s previous closing price of Rs 1,290 apiece. The domestic brokerage noted that the company’s profit saw a sequential decline of 1.5% on account of weaker treasury gains and higher opex.
CASA growth remained lacklustre at 11% YoY (up 2% QoQ). NIM declined 10bps QoQ to 3.36%, dragged by heavy FCNR (B) flows. Adjusted for FCNR (B), NIM has improved 1bp sequentially to 3.47%. In Centrum’s view, sustainability of retail loan growth remains key for NIM improvement.

Dolat Capital maintained its ‘Accumulate’ rating but reduced its target price to Rs 1,470 apiece from Rs 1,525 apiece, citing a decline in sustainable margins. The latest target price implies around 14% upside potential from the stock’s previous closing price. According to the brokerage, retail growth momentum is essential to increase margins and ROAs from current levels and its target multiple accounts for this concern.

360 One WAM maintained its ‘Buy’ rating on the stock but increased its target price to Rs 1,590 apiece. It noted that the company’s profit was marginally lower than its estimates, on the back of lower other income and higher opex. Axis Bank’s loan growth was largely driven by overseas, SME and corporate segments. While sequential NIM decline was marginally higher than expected, the bank remained confident of NIM recovery in the second half of FY27, led by deployment of surplus liquidity and rate hikes. Overall slippages and credit costs remained under control.

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.