Axis Bank shares gained nearly 3 per cent on Thursday to hit Rs 1,202.30 in the early trading session, after the lender’s September quarter (Q2 FY26) results drew strong reactions from leading brokerages.
Despite a sharp fall in profit due to one-time provisions, analysts see improving core performance and remain largely positive on the stock.
The bank reported a 25.3 per cent year-on-year decline in consolidated net profit to Rs 5,528 crore, impacted by a Rs 1,231 crore RBI-mandated provision on discontinued crop loan products.
On a standalone basis, profit stood at Rs 5,090 crore, down from Rs 6,918 crore a year ago.
Still, Axis Bank delivered 12 per cent loan growth, steady margins, and a decline in bad loans, which helped offset some of the impact from higher provisions.
Net interest income (NII) grew 2 per cent YoY to Rs 13,745 crore, while net interest margin (NIM) stood at 3.73 per cent, slightly lower than 3.99 per cent a year ago.
Chief Financial Officer Puneet Sharma said margins are expected to bottom out in Q3, assuming no further rate cuts by the Reserve Bank of India.
Asset quality improved with the gross NPA ratio easing to 1.46 per cent from 1.57 per cent in the previous quarter.
Read More: Axis Bank Q2 FY26 Results: Net profit falls 25% YoY to Rs 5,528 crore; NII increases 2.2%
Brokerage Bullish Despite Loss
Brokerages remain bullish on Axis Bank despite its Q2 profit decline because the fall was mainly due to a one-time ₹1,231 crore provision on discontinued crop loans, not a sign of business weakness.
Analysts say the bank’s core performance remains strong, with healthy loan and deposit growth, stable margins, and improving asset quality. The net interest margin slipped only slightly, and slippages moderated, showing better credit control.
Many expect the one-off provision to be reversed in the coming quarters, boosting earnings.
With valuations still reasonable and growth visibility improving, brokerages like Jefferies, Nomura, and HSBC continue to maintain their buy ratings, calling the profit drop a temporary setback in an otherwise steady growth story.
Here’s what top brokerages said:
Jefferies maintained a buy rating, raising its target price to Rs 1,430 from Rs 1,370. It highlighted better-than-expected NIMs, double-digit growth in loans and deposits, and moderation in slippages as positives.
Nomura also maintained a buy call, lifting its target to Rs 1,440 from Rs 1,400, citing “strong operational performance” despite one-off provisions.
HSBC reiterated a buy with an upgraded target of Rs 1,460 (from Rs 1,340), noting “very strong results in loan growth, margins, and asset quality,” and calling the earnings inflexion “visible.”
CLSA kept an accumulate rating with a target of Rs 1,400, stating that the quarter marks a “trend shift” with improving growth and lower slippages.
JPMorgan maintained a neutral stance with a Rs 1,260 target, citing higher provisions on crop loans as a drag.
Bernstein maintained outperform, with a Rs 1,250 target, saying credit costs remain elevated but are likely to reverse in the coming quarters.