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

Axis Bank's valuation gap versus large private peers to continue owing to lower return on asset, growth constraints, and slightly weaker liability profile, says Dolat Capital.

Axis Bank reported in-line profitability metrics benefitting from continued opex optimization, despite muted fee growth and slightly higher credit costs.

(Photo Source: Axis Bank's Facebook page)

Axis Bank maintains structural net interest margin guidance of 3.8% through cycles, opex optimisation will continue barring quarterly seasonality.

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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%.

Click on the attachment to read the full report:

Dolat Capital Axis Bank Q3 FY25 Result Update.pdf
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Also Read: Infosys Q3 Results Review — Pass Throughs Drive The Show; Q4 To See Moderation; 'Reduce' Says Dolat Capital

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