Axis Bank Q1 Review: Lender Sees Barrage Of Price Target Cuts After Rise In Provision, Worsening Asset Quality

Brokerages have turned cautious on Axis Bank following its April-June quarter earnings miss, with most of them trimming their target prices on the private lender amid rising concerns over asset quality and elevated credit costs.

While most maintain a positive long-term stance, the near-term outlook has been clouded by volatile earnings and operational challenges.

Jefferies, Citi Bank, Nuvama Institutional Equities, Systematix Institutional Equities, and Motilal Oswal Securities have all slashed their price targets, citing the surge in slippages due to technical reclassifications and compression in margins.

Jefferies has cut its target price to Rs 1,370 from Rs 1,450, saying that the asset quality of the bank has disappointed, with slippages rising due to new classification norms. While trends may stabilise from the September quarter, results were weak, and only the valuation discount has kept its 'buy' rating intact.

Citi also lowered its target to Rs 1,285 from Rs 1,320, flagging "significantly higher technical slippages that adversely impacted earnings."

It remains neutral on the stock as it awaits greater consistency before turning more constructive.

On the other hand, Nuvama Institutional Equities downgraded shares of Axis Bank to hold from buy earlier and slashed its price aim to Rs 1,180 from Rs 1,400.

The brokerage cited "repeated volatility in asset quality and growth," with Q1 slippages of Rs 8,200 crore, 72% higher on the quarter, and higher-than-normalised credit costs even after adjusting for technical factors.

Motilal Oswal and Systematix also pared their earnings estimates and targets. Motilal Oswal has cut its FY26 and FY27 estimates by 8.6% and 5.7%, respectively. It also revised its target to Rs 1,250, warning that credit costs and margin pressures will remain elevated till the reclassification exercise concludes in Q2.

Systematix slashed its price aim to Rs 1,375 from Rs 1,475, factoring in higher provisions in FY26.

While maintaining an outperform rating with a target price of Rs 1,450, Macquarie raised red flags over high credit costs and onerous growth aspirations that pose downside risks to return ratios.

Despite the earnings volatility, Emkay Financial Services and Dolat Capital Research remained constructive. Emkay retained its Rs 1,400 target, saying the bank’s prudent stance, though leading to near-term pain, should improve long-term stability.

Dolat maintained an 'accumulate' call with a target price of Rs 1,250, though it trimmed FY26 and FY27 estimates by 5-6% on the back of lower NIM and higher provisions.

Nirmal Bang remained cautious, reiterating a 'hold' rating with a slightly raised target price of Rs 1,287. It flagged two major structural concerns: a high credit-to-deposit ratio of 91.2% and a predominantly floating-rate loan book that could hit margins in a falling rate cycle.