Buy Axis Bank; target of Rs 1470: Sharekhan

Sharekhan's research report on Axis Bank

Q1FY25 numbers were a mixed bag, wherein core operational performance was better than expectation led by stable NIMs and lower opex, however asset quality and deposit growth was weaker than expectations. Net slippages were higher at Rs. 3,290 crore versus Rs. 1,316 crore q-o-q which resulted in higher credit cost (at 84 bps versus 50 bps q-o-q). The bank guided that net slippages / credit cost were higher due to seasonality in agri loan portfolio, higher delinquencies in unsecured retail, lower recoveries and upgrades, and a potential write-off largely from wholesale segment. The bank also emphasised that these are not sustainable trends in asset quality and are likely to reverse in coming quarters.

Outlook

We maintain buy with an unchanged PT of Rs. 1,470. Stock currently trades at 2.0x/1.7x its FY2025E/FY2026E core BV estimates.

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