Axis Bank Cracks 6% After Q1 Results Disappoint; Analysts Flag NIM, Asset Quality Risks

Last Updated:July 18, 2025, 09:40 IST

Axis Bank shares fell as much as 6% in early trade on Friday, July 18, after they were downgraded by brokerages post Q1 earnings

Axis Bank share price fell as much as 6% in early trade on Friday, July 18, after they were downgraded by brokerage firms Nuvama and JPMorgan, in response to the lender’s quarterly results that were reported after market hours on Thursday.

Nuvama has downgraded Axis Bank’s stock to “Hold” from its earlier “Buy” recommendation, and has slashed its price target to Rs 1,180 from Rs 1,400. The revised target is almost at par with the stock’s closing level on Thursday, just before the Q1 results were announced.

JPMorgan also downgraded Axis Bank to “Neutral” from “Overweight”, cutting its price target to Rs 1,265 from Rs 1,315.

Nuvama, in its note, flagged a 17 basis point sequential decline in Net Interest Margins (NIMs), even though Axis Bank has been among the slowest in passing on RBI rate cuts to its borrowers. As a result, the brokerage has trimmed its FY26 and FY27 Earnings Per Share (EPS) estimates by 5% and 6%, respectively.

JPMorgan has also reduced its EPS forecasts for FY26, FY27, and FY28 by 9%, 4%, and 4%, respectively, citing limited upside potential as a key concern for the downgrade.

On the positive side, Bernstein has maintained its “Outperform” rating with a price target of Rs 1,300 per share. It acknowledged that Axis Bank reported another weak quarter but suggested that the stock may be bottoming out, even as it tests the boundaries of the “but it’s cheap” argument. Bernstein also expressed concern over deteriorating asset quality alongside the sharp decline in NIMs, even after adjusting for technical factors.

CLSA too retained its “Outperform” rating and reduced its price target to Rs 1,350 from Rs 1,400. It noted that, after adjusting for interest reversals, the NIMs dropped only 13 basis points sequentially.

Investec continues to rate the stock a “Buy”, though it lowered its price target to Rs 1,350 from Rs 1,430. It expects Axis Bank to deliver a Return on Assets (RoA) of 1.4% and Return on Equity (RoE) of 14% in FY27, citing attractive valuations.

Among the 52 analysts covering the stock, 42 still have a “Buy” rating, while 10 suggest a “Hold”. Notably, no analyst has issued a “Sell” call on Axis Bank.

Axis Bank Q1 Results Highlights

Axis Bank on Thursday reported a 4% year-on-year fall in first-quarter net profit to Rs 5,806 crore, hit by higher provisions for bad loans. Its net interest income, the difference between interest earned and interest expended, rose marginally to Rs 13,560 crore.

The country’s fourth-largest private lender by market capitalisation reported a 10% rise in gross non-performing assets (NPAs) to Rs 17,764 crore during Q1 FY26. Its provisions nearly doubled to Rs 3.947.7 crore.

Shares of Axis Bank opened 6% lower post-results and are currently trading at Rs 1,090. Despite the drop, the stock remains well above its 52-week low of Rs 933.5.

Aparna Deb

Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More

Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More

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