Axis Bank Q4 Results Review: ICICI Securities Maintains 'Buy' On Inexpensive Valuations, Hikes Target Price

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ICICI Securities Report

While Axis Bank Ltd.'s advances growth (13.7% CAGR and 8% YoY) is relatively slower, the calculated net interest margin expansion (~35bps over FY22–25) is on the higher side across banks, suggesting focus on profitable growth.

Amidst impending pressure on loan yields, we expect growth to be relatively subdued in the near term, though it could see healthy recovery in CY27 from stable rates and easing liquidity conditions. We estimate the bank to deliver ~1.6% RoA in FY26 (similar for FY27) vs ~1.7% in FY25 with a slight dip in NIM, partly offset by opex and stable credit costs.

Maintain Buy with a revised target price of Rs 1,400 (prior: Rs 1,320), valuing the core banking business at ~1.7x FY27E core banking book (1.6x) and Rs 133/share for subsidiaries.

Stock trades at ~30% discount to HDFC Bank and given similar growth outcomes and improving liquidity/credit cost environment, could bridge the gap in-part (as RoA differential is still there).

Key risks are higher-than-expected rise in slippages impacting profitability.

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