Target: ₹1,500
CMP: ₹1,270.05
Axis Bank is currently navigating operational challenges attributed to a tough market environment and concerns regarding asset quality. The bank experienced modest loan growth during the first half of the fiscal year, with credit costs and slippages exceeding those of its peers. However, there are indications that these issues are beginning to dissipate. Coupled with a favorable liquidity environment, characterized by reduced pressure on deposits, this may facilitate a boost in credit growth.
Recent industry data reveals stable or improving trends in consumer credit and personal loans, which, following the implementation of policy changes, could lead to a gradual enhancement in retail asset quality. Forecasts predict loan growth of approximately 14-15% for FY26-27, with return on assets (ROA) and return on equity (ROE) expected to be around 1.7% and 15%, respectively, over FY26-28.
In terms of stock performance, Axis Bank shares have risen by 11% over the past year, currently trading at 1.5 times the projected FY27 price-to-book value (P/BV). This valuation stands at a significant 26% discount compared to ICICI Bank and is 23% and 8% lower relative to HDFC Bank and Kotak Mahindra Bank, respectively.
The persistent valuation discount compared to its peers suggests a favorable risk-reward ratio at this P/BV multiple. Axis Bank’s positioning is perceived to be stronger than that of state-owned enterprises and mid-sized banks, prompting an upgrade from Neutral to Buy.
The bank’s sum-of-the-parts (SOTP) based price target of ₹1,500 indicates a 1.8x FY27E P/BV for its core operations (up from 1.6x previously), with its subsidiaries valued at ₹90 per share, following upward revisions in earnings per share (EPS) estimates and the rollout of the target multiple to FY27E.
Key risks to this outlook include potential declines in loan growth and further deterioration in asset quality.
Published on November 19, 2025
