Axis Bank shares dropped over 5% to ₹1,099 on July 18 after the bank posted a weak Q1 report. The fall came after disappointing numbers in profit growth, margins, and rising bad loans.
Global Depositary Receipts (GDRs) of Axis Bank also tumbled 5% to $64.3. Investors reacted sharply to signs of worsening asset quality.
What Went Wrong in Q1?
Axis Bank reported muted profit and net interest income (NII) growth. What shocked the market more was the rise in fresh slippages and falling margins.
The gross NPA (non-performing assets) rose to 1.57% from 1.28% last quarter. Net NPA increased to 0.45% from 0.33%. This means more loans turned bad during the quarter.
The bank said technical factors led to a one-time impact of ₹614 crore on profits. It also reduced return on assets by 15 basis points and return on equity by 1.4%.
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Brokerages Turn Cautious
After the results, top brokerages either cut ratings or lowered their targets.
Nuvama downgraded Axis Bank to “Hold” and slashed its target price to ₹1,180. It said margins were below expectations and slippages rose both quarter-on-quarter and year-on-year. It also cut its FY26 and FY27 earnings estimates by 5% and 6%.
Motilal Oswal kept a “Neutral” rating and set a target of ₹1,250. It warned that the bank’s clean-up exercise will likely keep credit costs high in the next quarter too. It cut FY26 and FY27 earnings estimates by 8.6% and 5.7%.
Bernstein, however, stayed more positive with an “Outperform” call and a target of ₹1,300. Still, it admitted the quarter was weak. EPS dropped 4% year-on-year, and both loan and deposit growth slowed to 8–9%.
What’s Next for Axis Bank?
The bank says it’s almost done with its clean-up. But with rising credit costs and shrinking margins, pressure is not going away soon.
Margins dropped 17 basis points quarter-on-quarter, and that hurts long-term investor confidence.
For now, the market is not happy. Axis Bank has work to do if it wants to win back trust.
Disclaimer:
This article is for informational purposes only and is not financial advice. Please consult a certified advisor before making investment decisions.
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