Axis Bank Target Price of Rs 1600 Set by Prabhudas Lilladher Analysts

Axis Bank Sees Mixed Quarter, Research Firm Adjusts Loan Growth Estimates

In its latest research report, Prabhudas Lilladher has assessed the quarterly performance of Axis Bank (AXSB), highlighting a mixed outcome that was characterized by better fees and asset quality being offset by a miss on Net Interest Income (NII) and operating expenses. Notably, NII growth at 1.2% quarter-over-quarter (QoQ) was lower than loan growth of 6.4%, driven primarily by back-ended corporate accretion.

The research firm has opted to raise loan growth estimates for Axis Bank by 100 basis points each for FY27/28E to 13%. This upward revision is largely attributed to the bank's strong capital position, with a Common Equity Tier-1 (CET-1) ratio of approximately 15%, a Loan-to-Deposit Ratio (LDR) of 92%, and a Liquidity Coverage Ratio (LCR) of 117%. Given these factors, deposit growth is expected to be a key driver of loan growth.

In terms of the bank's outlook, Prabhudas Lilladher has trimmed Net Interest Margin (NIM) estimates for FY27/28E by an average of 10 basis points. However, this reduction is expected to be offset by better loan growth, fees, and operating expenses. Consequently, the research firm has cut core Profit After Tax (PAT) estimates by an average of 2%. Despite these adjustments, Prabhudas Lilladher has maintained its multiple at 1.7x and has raised the target price to INR 1,600 from INR 1,500. The firm has retained its 'BUY' recommendation for Axis Bank.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data