Market Response and Analysis
Following the announcement of Axis Bank's third-quarter earnings, the stock experienced a notable surge, climbing by 4%. This positive movement has been
significantly influenced by the bank's reported profit increase, leading to a wave of bullish sentiments among financial analysts. CLSA, maintaining an 'Outperform' rating with a target of Rs 1,500, emphasized the strength of the bank's asset quality as a key highlight. HSBC, echoing a positive stance, reiterated a 'Buy' call with a target of Rs 1,580, highlighting improvements in credit costs and robust growth. Jefferies also sustained its 'Buy' rating, setting a target of Rs 1,550, and attributed the profit beat to a stronger topline, reduced credit costs, and controlled operational expenses. These assessments underscore the market's favorable reaction to the bank's performance indicators.
Financial Performance Insights
During the reported quarter, Axis Bank demonstrated substantial financial growth and efficiency. The bank's interest income saw a 4.3% year-over-year increase, reaching Rs 32,274 crore from Rs 30,954 crore in the corresponding period of the previous year. Concurrently, interest expenses grew by nearly 4%, reaching Rs 17,988 crore compared to Rs 17,348 crore the previous year. The net interest income (NII) experienced a 5% YoY and a 4% quarter-on-quarter (QoQ) expansion, totaling Rs 14,287 crore, with the net interest margin (NIM) reported at 3.64%. On the asset quality front, provisions and contingencies were recorded at Rs 2,246 crore for the quarter, which included specific loan-loss provisions of Rs 2,307 crore. Cumulative provisions, excluding NPAs but including standard and additional buffers, were Rs 13,111 crore as of Q3FY26. This translated to a standard asset coverage ratio of 1.14% as of December 31, 2025. Furthermore, the provision coverage ratio (PCR) stood strong at 146% of gross NPAs at the quarter's conclusion, showing the bank's robust financial health.
Brokerage Recommendations Details
Multiple brokerages have shown confidence in Axis Bank's future, as highlighted by their upgraded ratings and revised target prices. Citi upgraded the bank to 'Buy' and boosted its target price to Rs 1,436, forecasting an upside of over 14%. Citi pointed out a core earnings beat and a return on assets (RoA) of approximately 1.5%. They also noted stable slippages despite seasonal agricultural impacts, lower-than-expected credit costs, and better cost efficiency, even with soft treasury gains and fee income. Nomura reiterated a 'Buy' rating with a target price of Rs 1,540, highlighting improved credit cost visibility and solid growth momentum. They anticipate RoA of 1.7–1.8% and a return on equity (RoE) of roughly 15% over FY27–28, with an estimated earnings CAGR of 26%. Bernstein, with an 'Outperform' rating and a target of Rs 1,480, described the quarter as mixed. They noted healthy loan and deposit growth, offset by margin pressure and elevated credit costs, while RoA remained steady at about 1.5%. These varied perspectives demonstrate a generally positive outlook, influenced by the bank's recent performance.
