Axis Bank Q4 Results Review - Net Interest Margin Surprise; Treasury Gains Aid Earnings: Dolat Capital

Dolat Capital Report

Axis Bank Ltd. reported better than expected net interest margin at 4.06% (+5 basis points) despite 300 bps decline in credit-deposit ratio, as yields continued to strengthen. Deposit growth gained traction at 6% QoQ with 5% QoQ growth in retail TDs. Return on asset at 2% also benefitted from strong treasury gains.

Management highlighted that board approval to raise equity capital is an enabling resolution, with no immediate need for an equity raise. Growth could, however, be constrained by traction in deposits amidst a high loan deposit ratio. Advances growth at 4% QoQ was driven by higher yielding segments within retail (up 7% QoQ) and small and medium enterprise (up 5%).

We tweak our earnings estimate and maintain ‘Buy’ rating on the stock with target price of Rs 1325 (Rs 1270 earlier), valuing at two times FY26E price/adjusted book value.

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