Buy Axis Bank Ltd For the Target Rs.1,400 by Geojit Financial Services Ltd
Digital transformation gains momentum
Axis Bank offers a range of banking services in India, including cash and credit management, retail banking, investment management and treasury services.
* In Q2FY26, Axis Bank’s interest income grew 1.8% YoY (-0.3% QoQ) to Rs. 30,970cr on increased disbursals across retail, SME and corporate segments. Interest expense rose 1.7% YoY (-1.6% QoQ) to Rs. 17,226cr.
* Net interest income grew 1.9% YoY (+1.4% QoQ) to Rs. 13,745cr. Net interest margin stood at 3.73% compared with 3.80% in Q1FY26, mainly due to the passthrough impact of repo cuts and lower loan yields.
* Axis Bank's total income grew 1.2% YoY (-1.9% QoQ) to Rs. 37,595cr, on higher income on investment and interest on balances with the Reserve Bank of India.
* The pre-provision operating profit fell 2.8% YoY (-9.6% QoQ) to Rs. 10,413cr because of higher operating expenses, which rose 4.9% YoY.
* The management said that NIM is expected to bottom out by Q3FY26, assuming there are no further rate cuts and the balance sheet mix improves.
Outlook & Valuation
The bank showcased steady operational momentum, supported by disciplined execution, diversified growth and healthy traction across retail, SME and corporate businesses. The management guided that margin is likely to bottom out in the coming quarters as anticipated repo rate cuts exert near-term yield pressure. The bank is focused execution excellence, expanding its distribution network across 2,740 branches and accelerating digital transformation through pioneering agentic AI-powered payment solution for UPI and multiple CBDC initiatives. Company’s management is focused on its GPS strategy for building a resilient franchise. Advances are expected to grow around 300bps faster than the industry over the medium term, supported by technology, lead efficiency and prudent portfolio management. Therefore, we have retained our rating on the stock to BUY, with a revised target price to Rs. 1,400 based on 1.8x FY27E BVPS.
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SEBI Registration Number: INH200000345
