Axis Bank Q4 Results Review: Motilal Oswal Maintains 'Neutral' Stance, Hikes Target Price Post Inline Earnings

Axis Bank's expansion in margin was primarily driven by better asset quality (2bp), while an additional 1bp came from interest income on IT refunds. A written-back provision of Rs 8.01 billion on security receipts was booked on P&L, while Rs 5.37 billion of interest on these receipts has not been booked. The bank has seen stabilization in the card portfolio. Personal loan will take a few more quarters to show improvement.

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Motilal Oswal Report

Axis Bank Ltd. reported in-line earnings, with margins expanding 4bp QoQ. Asset quality improved slightly as slippages were under control, while the gross/net non-performing asset ratio improved sequentially.

Deposits grew 7% QoQ, while advances grew 3% QoQ, leading to an improvement in the C/D ratio to 88.7%. Average liquidity coverage ratio stood at 118%. Some stabilization was seen in the credit card portfolio; however, the bank is becoming more stringent in classifying loans, which could affect slippages going forward.

Additionally, given the rate cut, margins are expected to remain under check. We fine-tune our earnings and estimate FY27E RoA/RoE of 1.7%/15.0%. Reiterate Neutral with a target price of Rs 1,300 (1.6x FY27E adjusted book value).

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