'Buy' Axis Bank Maintains ICICI Securities On Attractive Valuations

Overall, Axis Bank is likely to be a key beneficiary of easing liquidity and peaking systemic stress in unsecured retail. The brokerage's estimates are broadly unchanged. It sees a soft H1 FY26 due to pressure in net interest margin and frontloaded credit costs, but a potentially healthy improvement in H2 FY26. As against the muted EPS growth in FY26, ICICI Securities sees strong double-digits growth for FY27E led by a NIM uptick and easing credit costs.

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ICICI Securities Report

Axis Bank Ltd.'s stock has seen derating in the last ~12 months due to softer than systemic deposits/loan growth, relatively higher stress in unsecured retail and senior personnel exits. Slower deposits growth could be partly attributed to preferring quality (run-off rate) and keeping a tight leash on funding costs.

The NTB acquisition has been healthy, though Axis needs to step-up deepening on ETB deposits, in our view.

Relative to peers, the bank has delivered soft loan growth, though net interest income growth outcomes (FY25 growth of 9% YoY) have been similar to peers, suggesting sharper focus on profitable growth.

We appreciate Axis Bank's focus on RaRoC-driven growth approach. That said, sharper focus on home loans, where it has been losing market share, should also be important to the bank, in our view.

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