Shares of Axis Bank slipped over 5% to Rs 1,099 on July 18 as the lender posted a disappointing financial performance for the June quarter (Q1FY25). The bank reported muted growth in profit and net interest income (NII), along with a sharp rise in slippages and contraction in margins.
This weak performance triggered a wave of downgrades from major brokerages, who cited worsening asset quality and increasing margin pressure as the main concerns.
“Axis Bank’s Q1 numbers fell short of expectations on several fronts — from profit to asset quality and margins,” analysts noted.
GDRs Also Slide on Weak Earnings
It wasn’t just the domestic stock that took a hit. Axis Bank’s Global Depositary Receipts (GDRs) also declined sharply, falling 5% to $64.3. The drop followed the bank’s weaker asset quality metrics in the June quarter, sparking concerns among international investors as well.
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Brokerages Cut Ratings, Lower Targets
Brokerages were quick to respond to the Q1 miss.
Nuvama Institutional Equities downgraded Axis Bank from “buy” to “hold”, slashing its target price to Rs 1,180 per share. The brokerage flagged a significant miss in Net Interest Margins (NIM) and highlighted a worrying rise in core slippages and credit costs, both on a quarter-on-quarter and year-on-year basis.
“Margins have come in lower than expected, and fresh slippages have seen a sharp rise, which raises red flags on asset quality,” Nuvama said in its report.
In response to the weak outlook, Nuvama cut its FY26 and FY27 earnings estimates for Axis Bank by 5% and 6%, respectively.
Key Concerns for Investors
The Q1 results have brought several key concerns to the forefront:
Shrinking margins (NIM), a critical profitability metric for banks
Sharp rise in slippages, indicating fresh stress in the loan book
Muted profit and NII growth, failing to meet analyst expectations
Rising credit costs, reflecting increased provisioning
These issues have not only impacted sentiment but have also raised doubts about the bank’s near-term growth trajectory.
“The rising stress in the loan book and lower profitability metrics may weigh on Axis Bank’s performance in the coming quarters,” experts cautioned.
What Lies Ahead for Axis Bank?
While Axis Bank remains a strong player in the private banking space, the latest results have clearly shaken investor confidence. Much will depend on whether the bank can recover margins, improve asset quality, and restore earnings momentum in the next few quarters. Until then, the stock may face pressure as analysts and investors closely track the bank’s asset quality trends and profitability metrics.
