Axis Bank Q3 Results Review- Dolat Capital Maintains 'Add', Revises Target Price; Sees 20% Upside — Here's Why

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Dolat Capital Report

Axis Bank Ltd. reported in-line profitability metrics benefitting from continued opex optimization, despite muted fee growth and slightly higher credit costs. Loan and deposit growth was weak at 1.5%/0.8% QoQ respectively, though growth in high focus segments (small business banking, mid corporate and SME) was healthy at 4% QoQ. Slippage ratio at 2.2% was slightly elevated.

High slippage mainly came from retail, primarily unsecured retail (credit card, personal loan, micro finance) and seasonally higher agri slippages. Management highlighted that focus on high risk-adjusted return on capital products has limited growth, but it remains comfortable with current LDR levels (at 92.6%). Opex optimization will continue barring quarterly seasonality.

We factor in lower growth and slightly higher credit cost assumptions for FY25E, with 5% downward revision in estimates. Maintain ‘Accumulate’ rating with revised target price of Rs 1250, valuing the bank at 1.8x Sep-26E P/ABV against RoA/RoE of 1.7%/16%.

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