Axis Bank share price is expected to remain in focus after brokerages Citi and Goldman Sachs retained a positive stance on the private sector lender following strong business growth in the second quarter of FY27 and robust mobilisation of FCNR(B) deposits.
The private sector lender mobilised $10.62 billion in FCNR(B) deposits, accounting for around 8% of system-wide FCNR(B) mobilisation, compared with the bank's roughly 5.3% share of system deposits, Citi said. Goldman Sachs also highlighted the strong inflows, noting that $4.57 billion of the deposits were funded through the bank's overseas branches.
The bank's headline gross advances grew 22.7% year-on-year and 8.8% sequentially. Excluding loans extended by overseas branches, core advances growth remained strong at around 19% YoY and 5% QoQ, indicating healthy underlying momentum, Citi said.
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Deposits grew 20.7% YoY and 5.8% QoQ, largely driven by FCNR(B) inflows. Adjusting for these deposits, however, growth was weaker. Citi said the bank used part of the FCNR(B) inflows to reduce high-cost bulk deposits, which should limit excess liquidity on the domestic balance sheet and support margins relative to peers.
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Citi expects net interest margins to decline around 8 basis points sequentially in the second quarter, as the lower spreads on overseas lending against FCNR deposits create a drag. However, this is expected to be partly offset by lower agricultural slippages and the retirement of expensive bulk deposits. NII growth is estimated at around 10% YoY.
The brokerage firm has a ‘Buy' call on Axis Bank shares, with a target price of Rs 1,620 apiece, implying an upside potential of over 32% from Monday's closing price.
Goldman Sachs also reiterated its Buy rating with a 12-month target price of Rs 1,477, saying cyclical headwinds are largely behind the bank and underlying margins should recover from FY28, supported by a favourable mix shift towards retail and SME lending.
The brokerage sees Axis Bank trading at an attractive 10x FY28 estimated P/E, with core profit growth expected to rebound.
Investors will focus on margins, credit costs, fee income and retail lending momentum when Axis Bank reports its quarterly results.
On Monday, Axis Bank share price ended 0.82% higher at Rs 1,223.95 apiece on the BSE.
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