Axis Bank Q3 Results Review — IDBI Capital Lowers Target Price But Maintains 'Buy' On The Stock; Here's Why

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IDBI Capital Report

Axis Bank Ltd. reported slowdown in credit growth during Q3 FY25 to 9% YoY versus 11% YoY (Q2 FY25). Credit growth slowdown was accentuated by lower deposit growth at 9% YoY vs 14% YoY (Q2 FY25). Net interest margins declined by 6 bps QoQ to 3.93% led by interest reversal and higher liquidity coverage ratio; further we expect impact of rate cuts on margins. Asset quality deteriorated slightly as gross non-performing asset stood at 1.46% versus 1.44% led by higher slippages.

Net interest income grew by 9% YoY led by lower NIMs. Pre-provision operating profit grew by 15% YoY due to lower operating expenses. Provisions increased by 110% YoY due to higher slippages which resulted PAT increased by only 4% YoY; thus return on asset declined to 1.64%.

We have moved to FY27E estimates and maintain Buy rating with the new target price of Rs 1,300 (earlier Rs 1,405) valuing the parent business at Rs 1,225 at 1.7 times price/adjusted book value FY27E and rest for the subsidiaries.

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