Axis Bank Q2 Results Review - Poor Half Year Should Not Make Us Lose Sight Of The Long-Term: Yes Securities

Yes Securities Report

We reiterate Buy rating on Axis Bank Ltd. with a revised price target of Rs 1475.

Asset Quality – Gross slippage remained slightly elevated compared with FY24, while management made material excess provisions:

Gross NPA additions amounted to Rs 44.43 billion for Q2 FY25, translating to an annualized slippage ratio of 1.8% for the quarter. Gross slippage ratio had amounted to 1.9% during Q1 FY25 whereas the gross slippage ratio for FY24 had amounted to 1.6%.

For the quarter, the retail segment contributed as much as Rs 40.73 billion to gross slippages, with the bank citing stress in the unsecured segments.

Recoveries and upgrades improved to Rs 20.69 billion for Q2 FY25 compared with Rs 15.03 billion in Q1 FY25 as accounts whose recovery was delayed in Q1 were recovered in Q2.

Provisions were Rs 22.04 billion, up by 8.1% QoQ and 170.6% YoY, translating to calculated all-inclusive annualised credit cost of 89 bps. Additional contingency provisions made in the quarter were Rs 5.20 billion and these are purely prudential and do not reflect the management’s view of stress on the balance sheet.

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