'Buy' Axis Bank Shares Maintains Systematix Post Q1 Results, But Cuts Target Price — Here's Why

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Systematix Report

Axis Bank Ltd. reported Q1 FY26 PAT of Rs 58 billion which declined by -18% QoQ and -4% YoY mainly due to-

1. significantly higher slippages and provisions on account of change in NPA recognitions and subsequent upgradation norms,

2. fall in the net interest margin as the bank was impacted by the repo rate cut.

Other income and operating expenses evolution have fared out well for the quarter.

The bank has reported a healthy sequential growth in advances of 1.8% in Q1 and has also guided to grow at better than industry rate in FY26.

However, margins would remain a drag in Q2 also as the bank have to still take the full impact of around 75bps repo rate cut. Further slippages and provisions are expected to remain elevated due to the revised internal norms. Axis Bank expects asset quality aspects to normalize from FY27.

Based on our revised estimates we have revised our target price to Rs 1375 (from Rs 1475 earlier) and maintain our Buy rating on Axis Bank.

We are valuing the standalone bank at 1.6x its FY27E book value per share of Rs. 763. Further we assign Rs 172 per share value to its subsidiaries and associates.

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