Axis Bank share price target: Nuvama Research has maintained its ‘Buy’ rating on Axis Bank, setting a 12-month price target of Rs 1,650 after reviewing the lender’s Q2 FY27 performance. The brokerage sees scope for further improvement in profitability, supported by strong credit growth, stable core margins and the prospect of a recovery in net interest margins (NIM) from the December quarter. However, lower treasury gains and higher staff costs weighed on the bank’s reported earnings during the quarter.
Axis Bank share price target
The brokerage said, “We believe strong credit momentum coupled with improving margins benefitting from FCNR/rate hike and lower LLP should drive-up RoA/RoE from 1.4%/13% in FY26 to 1.5–1.7%/14–17% over FY27–29E.”
Nuvama has valued the standalone bank at 1.6 times its estimated adjusted book value (ABV) for September 2028 and valued its subsidiaries at Rs 155 per share.
Private sector lender Axis Bank on Saturday reported a 39.4 per cent rise in its consolidated net profit to Rs 7,704.67 crore in the second quarter of 2026-27, supported by higher core income and improvement in asset quality.
The bank earned Rs 5,527.85 crore in consolidated net profit in the year-ago period.
On a standalone basis, the third-largest private sector lender reported a 37.6 per cent YoY rise in its net profit to Rs 7,003.28 crore from Rs 5,089.64 crore.
The bank’s operating profit climbed 6 per cent to Rs 11,083 crore for the quarter. Core operating profit increased 11 per cent to Rs 10,998 crore. Operating cost grew 9 per cent year-on-year in Q2 FY27.
The bank’s net interest income (NII) for Q2 FY27 stood at Rs 15,371 crore, up 5 per cent sequentially and 12 per cent YoY.
Its net interest margin (NIM) for Q2 FY27 stood at 3.36 per cent, according to regulatory filing.
“As we optimise FCNR(B) deployment, using the funds to support advances growth and replace some of our higher-cost deposits and borrowings, we should see some improvement in NIMs,” its chief financial officer Rajeev Mantri said during the post-earnings press conference.
The bank’s advances grew 23 per cent YoY and 9 per cent quarter-on-quarter to Rs 13,73,727 crore as of September 30, 2026.
Advances excluding loans backed by FCNR(B) deposits rose 19.1 per cent to Rs 13.30 lakh crore, according to the bank’s investor presentation.
“We are entering the second half with a higher base, given the growth recorded last year. Some moderation could occur at the industry level, alongside potential downside risks from inflation and rate increases.
“However, it remains uncertain how these factors will play out. At present, customer activity and the pipeline we are building continue to indicate healthy demand,” the bank’s management said during the call.
Retail loans grew 16 per cent to Rs 7,39,905 crore and accounted for 54 per cent of the net advances of the bank.
The share of secured retail loans was around 74 per cent, with home loans comprising 24 per cent of the retail book.
In the reporting quarter, the corporate loan book of the bank increased by 34 per cent to Rs 4.69 lakh crore.
“During the quarter, growth came from infrastructure, energy, metals, industrials and commercial real estate, among other sectors. It was also diversified across financing categories, including capital expenditure, project finance, working capital and refinancing,” said Vijay Mulbagal, group head, wholesale banking coverage of Axis Bank during the post-earnings call.
The lender does not depend on any single sector, client segment or financing category and hence, feels that the corporate loan growth will remain sustainable.
“While some customers may choose bond financing depending on their funding preferences, we expect our growth momentum to continue, supported by a consistent strategy over the past few quarters,” he said.
The total deposits grew 6 per cent QoQ and 21 per cent YoY on a month-end basis, of which current account deposits grew 7 per cent YoY, savings account deposits grew 12 per cent year-on-year and term deposits 27 per cent year-on-year.
The share of CASA deposits in total deposits stood at 36 per cent.
Deposits excluding FCNR(B) deposits backed by loans from the bank grew at a slower 17 per cent to Rs 14.08 lakh crore. The bank reported total FCNR(B) deposits of USD 10.62 billion, of which USD 4.57 billion was backed by loans extended by the bank and USD 4.69 billion by standby letters of credit.
In the reporting quarter, the bank’s gross non-performing asset (GNPA) ratio stood at 1.16 per cent, down 0.30 per cent year-on-year and 0.12 per cent quarter-on-quarter, and net NPA (NNPA) at 0.35 per cent, down 0.09 per cent year-on-year and 0.04 per cent quarter-on-quarter, according to a press release.
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Nuvama expects strong credit momentum, a potential recovery in margins and lower loan-loss provisions to support an improvement in return ratios over FY27–FY29.
The brokerage projects return on assets (RoA) to improve from 1.4 Per cent in FY26 to 1.5 – 1 .7 per cent over FY27–FY29. Return on equity (RoE) is projected to rise from 13 per cent to 14–17 per cent over the same period.
However, the brokerage has also revised some of its earnings estimates downward. It cut its FY27 adjusted profit estimate by 5.8 per cent and its FY28 estimate by 1.9 per cent.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)