Axis Bank Q3 Results Review  — Inline; Business Growth Moderates; Motilal Oswal Retains 'Neutral' Stance

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Motilal Oswal Report

Axis Bank Ltd. reported Q3 FY25 net profit of Rs 63 billion (up 3.8% YoY, in line) as lower opex offset higher provisions. In 9M FY25, earnings grew 8.6% YoY to Rs 192.6 billion, and we expect Q4 FY25 PAT to come in at Rs 68.4 billion.

Net interest income grew 8.6% YoY/1% QoQ to Rs 136 billion (inline). Net interest margins moderated 6 bp QoQ to 3.93%.

Provisioning expenses stood at Rs 21.6 billion (higher than our estimate due to high loan loss-related provisions) as Axis Bank tightened its provisioning rules.

Loan book grew 8.8% YoY (1.5% QoQ). Deposits grew 9.1% YoY (0.8% QoQ), resulting in a credit/deposit ratio of 92.6%. Current account and savings account mix moderated to 39%. Average liquidity coverage ratio increased 400 bp QoQ.

Fresh slippages increased to Rs 54.3 billion (Rs 44.4 billion in Q2 FY25, in line). Gross / net non-performing asset ratios inched up to 1.46%/0.35%. Provision coverage ratio stood at 76.2%.

We cut our FY26E/FY27E earnings by 4-5% and estimate FY26E RoA/RoE of 1.6%/14.6%. While the near-term growth and asset quality performance may remain suppressed, reflecting the stress in the macro environment, we see limited downside risk from the current levels. Retain Neutral with a target price of Rs 1,175 (1.5x Sep’26E adjusted book value).

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