Axis Bank Ltd (NSE: AXISBANK)
Target Price: ₹1,350
Time Horizon: 12–18 months

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Executive Summary

Axis Bank, India’s third-largest private sector lender, has demonstrated robust financial performance in FY25, marked by consistent growth in net interest income, improved asset quality, and a strong capital position. Despite a marginal decline in Q4 net profit, the bank’s strategic focus on retail lending, digital initiatives, and prudent risk management positions it well for sustained growth. Considering these factors, we recommend a BUY on Axis Bank with a target price of ₹1,350 over the next 12–18 months.

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Company Overview

• Founded: 1993
• Headquarters: Mumbai, Maharashtra
• Managing Director & CEO: Amitabh Chaudhry
• Branches: Over 5,700 across India
• ATMs & Cash Recyclers: Approximately 14,500
• International Presence: Branches in Singapore, Hong Kong, Dubai, Shanghai, Colombo; Representative offices in Dhaka, Dubai, Sharjah, and Abu Dhabi
• Website: www.axisbank.com

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Stock Snapshot (as of May 9, 2025)

• Current Market Price: ₹1,154.30
• 52-Week Range: ₹934.00 – ₹1,339.55
• Market Capitalization: ₹3.58 trillion
• Price-to-Earnings (TTM): 13.5
• Price-to-Book Ratio: 2.1
• Dividend Yield: 0.09%
• Beta: 1.1
• Promoter Holding: 0% (widely held)
• FII Holding: 47.5%
• DII Holding: 35.2%
• Retail & Others: 17.3%
• Recent Dividend: ₹1.00 per share (declared April 2025)
• Next Earnings Date: July 25, 2025

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Financial Performance

Q4 FY25 Highlights

• Net Profit: ₹7,118 crore, marginally down from ₹7,130 crore in Q4 FY24
• Total Income: ₹38,022 crore, up 6% YoY
• Net Interest Income (NII): ₹13,811 crore, up 6% YoY
• Net Interest Margin (NIM): 3.97%, down from 4.06% YoY
• Operating Profit: ₹10,752 crore, up 2% YoY
• Fee Income: ₹6,338 crore, up 12% YoY
• Gross NPA: 1.28%, improved from 1.43% YoY
• Net NPA: 0.33%, improved from 0.35% YoY
• Provision Coverage Ratio (PCR): 75%
• Capital Adequacy Ratio (CAR): 17.07% under Basel III norms
• Return on Assets (ROA): 1.74%
• Return on Equity (ROE): 16.52%

FY25 Full-Year Highlights

• Net Profit: ₹26,373 crore, up 6% YoY
• Total Income: ₹1,47,934 crore, up from ₹1,31,810 crore in FY24
• Operating Profit: ₹42,105 crore, up 13% YoY
• Advances: ₹10,40,811 crore, up 8% YoY
  • Retail Loans: ₹6,22,897 crore, up 7% YoY
  • SME Loans: ₹1,18,521 crore, up 14% YoY
  • Corporate Loans: Up 8% YoY
• CASA Ratio: 41%, up from 39% in Q3 FY25
• Earnings Per Share (EPS): ₹85.28, up from ₹80.67 in FY24

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Investment Rationale

1. Strong Financial Performance

Axis Bank has delivered consistent growth in key financial metrics, with a 6% YoY increase in net profit and a 13% rise in operating profit for FY25. The bank’s focus on high-yield segments and cost optimization has contributed to improved profitability.

2. Improved Asset Quality

The bank has demonstrated effective risk management, with gross NPA reducing to 1.28% and net NPA to 0.33% in Q4 FY25. The provision coverage ratio remains robust at 75%, indicating a strong buffer against potential credit losses.

3. Diversified Loan Portfolio

Axis Bank’s loan book is well-diversified across retail, SME, and corporate segments. Retail loans constitute 60% of total advances, with a significant portion in secured lending, reducing overall risk.

4. Digital and Technological Advancements

The bank continues to invest in digital platforms, enhancing customer experience and operational efficiency. Its mobile banking app ‘Axis Mobile’ and internet banking services have seen increased adoption, contributing to fee income growth.

5. Capital Adequacy and Liquidity

With a CAR of 17.07% and a comfortable liquidity position, Axis Bank is well-capitalized to support future growth and withstand economic uncertainties.

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Risks and Concerns

• Interest Rate Fluctuations: Changes in interest rates could impact NIM and overall profitability.
• Economic Slowdown: A downturn in the economy may affect credit demand and asset quality.
• Regulatory Changes: Alterations in banking regulations could impact operations and compliance costs.
• Competitive Pressure: Intense competition in the banking sector may affect market share and margins.

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Analyst Recommendations

• Motilal Oswal: BUY – Target ₹1,350
• Citi: BUY – Target ₹1,400
• Goldman Sachs: BUY – Target ₹1,300
• Jefferies: BUY – Target ₹1,320
• Nomura: BUY – Target ₹1,310
• Morgan Stanley: Overweight – Target ₹1,380
• HSBC: BUY – Target ₹1,340

The consensus among major brokerages is bullish, with target prices ranging from ₹1,300 to ₹1,400, reflecting confidence in Axis Bank’s growth trajectory.

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Conclusion

Axis Bank’s strong financial performance, improved asset quality, diversified loan portfolio, and strategic digital initiatives position it well for sustained growth in the Indian banking sector. Despite potential risks, the bank’s robust fundamentals and proactive management approach support a positive outlook.

Recommendation: BUY
Target Price: ₹1,350
Time Horizon: 12–18 months