Axis Bank Faces Downgrades Amid Weak Q3 Earnings

Following poor Q3 earrings, analysts have downgraded the stock of Axis Bank Ltd. The December earnings missed market expectations, majorly aggravated by soaring slippages (driven by agri and unsecured), soaring credit cost and slow deposit growth.

While asset quality for Axis Bank dipped slightly as slippages increased sequentially, NPA ratios remained stable, MOFSL said.

The brokerage said, “Credit cost rose as the bank tightened its provisioning policy. Deposit growth was muted, while advances grew 9 per cent YoY, leading to a C/D ratio of 92.6 per cent. We keenly monitor near-term growth as the C/D ratio is still high, which will constrain credit growth, while continued re-pricing of deposits may keep margins in check.”

Suggesting a target price of ₹1,175 for the stock, MOFSL cut its earnings in FY26 and FY27 by 4-5 per cent. It said that near-term growth and asset quality performance will remain weak, thereby highlighting stress in the macro environment. The brokerage also sees a downside for Axis Bank stock from the current levels.

Nuvama said, “Axis Bank reported a soft Q3FY25 with muted deposit growth, NIM decline of 6bp QoQ, lower fees, and a sharp rise in slippage and credit cost. Credit cost is now the highest among top five banks and deposit growth the slowest. Core income was weak, edging down QoQ, but a big dip in opex lifted core PPOP 5 per cent QoQ.”

Of the lagged loans, slippages for the quarter spiked to 3.6% from 3.1 per cent QoQ, buoyed by agri and unsecured.

Nuvama cut its already below-consensus EPS by 2 per cent and 5 per cent for FY25 and FY26 and suggested a new target price of ₹1,220 from ₹1,335.

Arihant Capital said, “Axis Bank posted a relative muted set of earnings for Q3FY25, slightly below our estimates while the Bank faces the slowest quarterly growth over the last several quarters. he Bank’s Management gave a rather bleak picture of the Macro economic environment currently developing, and stated that the slow economic growth is reflected on the customer’s asset growth as well.” The brokerage suggested a target price of ₹1,383 for Axis Bank.

As of 12:00 PM, shares of Axis Bank are trading at ₹986.40, down 4.97%.