Axis Bank
The improving ROE story
- Last close
- ₹1,212.10
- 29 Sept 2026 · reference
- 1D · 1M
- +0.2% · −4.2%
- price-only
- Weight
- 6.0%
- 31 Jul 2026 · Aug rank 2
- Thesis review
- 8 Sep 2026
- Why We Own, p28
Approved description
India's third-largest private bank (₹12.6 lakh crore of loans, ~5,900 branches) with a corporate-bank heritage that has been rebuilt into a balanced franchise since 2019: retail and SME are now ~70% of loans, the Citi consumer business (2023) added a premium card and wealth franchise, and the bank has the strongest technology delivery among the big three after ICICI. Subsidiaries (Axis Finance, Axis AMC, Axis Capital, Axis Securities, and a 20%-plus stake in Axis Max Life) are worth ~₹110 a share.
- 01The numbers are still improving: ROE goes from 12.7% (FY26) to 14% (FY27E) to 15.6% (FY31E) on our model as NIM recovers off the June-2026 trough, cost-to-assets falls below 2.15% and credit cost normalises to 65 bp — exactly the pattern the market has paid for historically.
- 02Cheaper than ICICI and Kotak: 1.7x core book against a 1.7x fair value from our residual-income model, with an 18% base-case and 16% probability-weighted 12-month return (BUY).
- 03Liability franchise catching up: deposits +18% YoY in 1QFY27, CASA 38–40%, the FCNR(B) scheme is bringing in cheap dollar funding, and the retail term-deposit engine built through 2024–25 is now lowering marginal cost.
- 04Operating leverage: opex growth held at 9–10% against 13–14% revenue growth; the Citi integration costs are behind it.
- 05House history: we owned Axis through its credit-cost trough over the past two years (up 40–50% for us) and the July file shows it at 6.0% — the second-largest position.
Reference close, with results-period markers
- 1Q Sep-25 end · 30 Sept 2025
- 2Q Dec-25 end · 31 Dec 2025
- 3Q Mar-26 end · 31 Mar 2026
- 4Q Jun-26 end · 30 Jun 2026
Quality score, technicals and Buoyant Score
Computing the scorecard…
Latest quarter · Q Jun-26
| Line (₹ cr) | Q Jun-26 | YoY | QoQ |
|---|---|---|---|
| Total Income | 43,213 | +7.0% | +5.0% |
| Interest Earned | 35,542 | +9.9% | +4.0% |
| PPOP | 12,499 | +2.3% | +15.5% |
| Net Profit | 7,632 | +22.2% | +0.4% |
Reported vs internal estimate: internal quarterly estimates are not in the supplied package; consensus feed not licensed. YoY/QoQ per PRD §12.5 (transitions, not %, on non-positive bases).
Position and valuation context
Bank preset: NII, PPOP, provisions, NIM, GNPA, CASA, ROA/ROE; P/B. Industrial leverage ratios suppressed.
Sell-side targets are third-party views, not Buoyant's; the upside is recomputed on our reference close, so it differs from the figure printed at the broker's price date.
Approved model
base TP ₹1,495 (+18%) (price basis 7–8 Sep 2026; internal, not for clients)
What we watch
- 2QFY27 NIM (the trough call) and the quantum of FCNR(B) deposits raised.
- Retail loan growth crossing 10% and cost-to-assets printing ≤ 2.15%.
- Any RBI relaxation on unsecured risk weights or a benign ECL transition disclosure.
- NIM: Axis has a history of margin disappointment; if 2Q NIM falls below 3.40% (reported) the recovery thesis is delayed by a year and the stock would test 1.5x book.
- Unsecured retail: credit cards and personal loans are ~10% of the book; a consumer-credit cycle would lift credit cost above the 65 bp we model.
- Deposit competition: LDR of 92% is above ICICI's 89%; a return of the FY25 funding squeeze would cap growth at 12% rather than 16%.