Broker’s call: Axis Bank (Buy)

Target: ₹1,500

CMP: ₹1,270.05

Axis Bank has been facing operating pressure due to a difficult operating environment and asset quality challenges. Loan growth in H1 was modest, while credit cost/slippages were relatively high vs peers. We believe these concerns are gradually abating, which, coupled with a favourable liquidity environment (easing deposits pressure), could drive credit growth.

Moreover, industry data suggests stable/improving trends in CC/PL stress which, post the full effect of policy changes, could likely aid a gradual improvement in retail asset quality. We expect loan growth of about 14-15 per cent for FY26-27 and ROA/ROE of around 1.7/15 per cent over FY26-28.

Axis Bank stock is up 11 per cent in the past 12 month and now trades at 1.5x FY27E P/BV (2SD below its five-year average) which is at a 26 per cent discount to ICICI Bank (five-year average of about 17 per cent) and 23/8 per cent discounts to HDFC Bank/Kotak Mahindra Bank.

The valuation discount to peers remains high and, at 1.5x FY27E P/BV, the risk-reward appears favourable. We believe Axis Bank is placed better than State-owned enterprises (SOE) and mid-sized banks. We upgrade Axis Bank from Neutral to Buy.

Our SOTP-based price target of ₹1,500 implies 1.8x FY27E P/BV for the core bank (1.6x previously) and subsidiaries at ₹90 per share as we raise our EPS estimates and roll forward our target multiple to FY27E

Key downside risks are lower loan growth and deterioration in asset quality.

Published on November 19, 2025