Axis Bank Q1 Results Review - Net Interest Margins Stable; RoA Dipped Due To Higher Credit Cost: IDBI Capital

IDBI Capital Report

Axis Bank Ltd.’s net interest margin remains stable at 4.05% backed by stable cost of funds. Further, management expects to largely retain the margins at the current levels. Credit growth remains stable at 14% YoY during Q1 FY25. Management retained guidance for 300-400 basis points higher than industry average in medium to long term.

Asset quality deteriorated as gross non performing asset stood at 1.54% versus 1.43% led by higher slippages. Net interest income grew by 3% QoQ backed by stable NIMs. Pre-provision operating profit de-grew by 4% QoQ due to lower other income. Provisions increased by 72% QoQ due to lower recoveries. Thus PAT declined by 15% QoQ; result RoA dipped to 1.65%.

We maintain estimates and ‘Buy’ rating with a target price of Rs 1,482 (earier Rs 1,400), valuing parent business at Rs 1,418 at 2.2 times price/adjusted book value FY26E (earlier 2.1x as Citi integration gets completed) and rest for the subsidiaries.

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