Shares of Axis Bank soared over 4% to an intraday high of Rs 1,184.70 on the BSE after the private lender posted a solid 18% year-on-year (YoY) increase in standalone net profit for Q2 FY25, reaching Rs 6,918 crore. This marks a significant rise from the Rs 5,864 crore reported in the same quarter of the previous financial year.
Growth in Net Interest Income and Margin
Axis Bank’s Net Interest Income (NII) grew by 9% YoY to Rs 13,483 crore. The bank’s Net Interest Margin (NIM) for Q2 FY25 stood at 3.99%, reflecting its stable performance in core banking operations.
Operating Profit and Core Operating Profit Increase
Operating profit for the quarter grew by 24% YoY and 6% quarter-on-quarter (QoQ) to Rs 10,712 crore. The bank’s core operating profit, excluding trading profit, also saw a healthy 10% YoY rise, reaching Rs 9,601 crore.
Brokerages on Axis Bank
Morgan Stanley on Axis Bank
Morgan Stanley issued an ‘Overweight’ call on Axis Bank with a price target of ₹1,445 per share. The firm noted that Axis Bank had underperformed after Q1 due to concerns over asset quality, but the situation showed improvement in Q2. Credit costs dropped significantly quarter-on-quarter (QoQ), and the bank utilized one-off gains to boost contingency provisions.
While core revenue growth remained muted, Morgan Stanley expects a positive outlook as deposit growth is likely to pick up over the next year, which could drive future improvements.
Nomura maintains ‘Buy’ on Axis Bank
Nomura gave a ‘Buy’ rating on Axis Bank, with a target price of Rs 1,380. According to the brokerage, Axis Bank delivered a steady performance in Q2 despite muted expectations. Loan and deposit growth were soft but aligned with market estimates. Lower net slippages and higher write-offs helped reduce gross non-performing loans (NPLs).
The bank’s treasury gains compensated for softer core pre-provision operating profits (PPOP), while one-off tax gains were used to bolster provision buffers. Nomura values the stock at 1.6x FY26 book value per share (BVPS), expecting a return on equity (RoE) in the range of 15-16%. The firm views the current risk-reward as favorable.
Macquarie maintains ‘Outperform’
Macquarie maintained its ‘Outperform’ rating on Axis Bank, setting a price target of Rs 1,400. The brokerage acknowledged growth concerns but emphasized that tax write-backs and treasury gains were key drivers behind the positive surprise in profit after tax (PAT).
Macquarie highlighted that Axis Bank strengthened its balance sheet by building contingency buffers, but it remains focused on how the bank manages incremental stress moving forward.
Bernstein Maintains ‘Outperform’ on Axis Bank
Bernstein has retained its ‘Outperform’ rating on Axis Bank with a target price of Rs 1,250, though it noted the second-quarter results offered limited upside. While credit costs showed sequential improvement, the overall beat was of lower quality, reflecting ongoing concerns about asset quality. The report also highlighted weak loan growth.
However, the bank’s reduced operating expenses and strong net operating income pushed the return on assets (RoA) above 1.8%, providing some optimism.
Investec Lowers Target Price, Keeps ‘Buy’ Rating
Investec continues to hold a ‘Buy’ rating on Axis Bank but has reduced the target price from ₹1,340 to ₹1,298. The brokerage attributed the recent performance to one-off factors, which led to a positive RoA beat. While near-term growth is expected to remain subdued, Investec remains confident in the bank’s long-term growth guidance.
Investec also noted that Axis Bank’s asset quality performance has exceeded expectations, offering some reassurance amid the cautious outlook.
Stocks Performance in Last One Year
Axis shares have delivered mixed returns across various time frames. Over the last month, the stock has shown a negative return of 4.47%. In the last six months, the performance has been impressive, with a substantial increase of 15.72%, showcasing the stock’s resilience and upward momentum.
Year-to-date, Axis Bank shares have surged by 7.50%, emphasizing the stock’s positive trajectory in the current calendar year. Looking back over the last twelve months, the stock has demonstrated significant growth, surpassing 19%.
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