Axis Bank Q3 Results Review: Earnings miss estimates; brokerages slash targets

Axis Bank reported a three-point eight three per cent year-on-year (YoY) increase in net profit at Rs 6,304 crore for Q3FY25, missing estimates of Rs 6,399 crore, according to Zee Business. Sequentially, profit declined 9 per cent, down from Rs 6,918 crore in Q2FY25.

NII growth below forecast, NIMs shrink
Net Interest Income (NII) grew nine per cent YoY to Rs 13,606 crore, compared to Rs 12,532 crore in the year-ago period. However, this was slightly below Zee’s estimated Rs 13,756 crore. The bank’s Net Interest Margin (NIM) narrowed to 3.93 per cent, down from 4.1 per cent a year ago and 3.99 per cent in the preceding quarter.

Asset quality under pressure
Axis Bank’s Gross Non-Performing Asset (GNPA) ratio rose to 1.46 per cent, compared to 1.44 per cent in Q2FY25. The Net NPA ratio increased marginally to 0.35 per cent from 0.34 per cent in the previous quarter. The bank reported gross slippages of Rs 5,400 crore, with net slippages adjusted for recoveries at Rs 2,217 crore. Retail slippages accounted for Rs 2,928 crore, while wholesale recorded negative slippages of Rs 761 crore.

Credit and deposit growth slow
Net advances grew 9 per cent YoY and 1 per cent quarter-on-quarter (QoQ). Total deposits increased thirteen percent YoY, reflecting slower-than-expected growth due to tight liquidity conditions.

Brokerages revise target prices
Following the results, brokerages revised their target prices. Emkay Global cut its target to Rs 1,300 from Rs 1,400 but retained a 'buy' rating. HSBC lowered its target to Rs 1,170 from Rs 1,350, maintaining its 'buy' tag. Morgan Stanley maintained an 'overweight' stance with a target price of Rs 1,300, citing long-term growth potential despite current volatility.

Management outlook cautious
In its post-earnings commentary, the management highlighted a challenging macroeconomic environment with a liquidity deficit. They foresee moderation in growth metrics and remain focused on maintaining deposit quality, cost of funds, and prudent asset selection.

Axis Bank’s Q3 performance highlights its struggle to balance profitability and growth amid macroeconomic headwinds, leaving investors cautious about near-term prospects.