Axis Bank shares fell more than 4% to ₹1,232 on the BSE on October 19, 2026, after the lender reported a 38% year-over-year increase in second-quarter standalone net profit. The stronger annual result came alongside a sequential profit decline and narrower reported lending margins, leaving brokerages divided over their price targets.
Key Takeaways
- Q2 FY27 net profit reached ₹7,003 crore, below the ₹7,124 crore average analyst estimate compiled by LSEG.
- Reported net interest margin declined sequentially to 3.36%, although asset quality improved.
- Brokerages retained positive ratings but differed on target prices and the prospects for margin recovery.
Table of Contents
- Axis Bank shares retreat despite annual profit growth
- Margin pressure complicates stronger lending growth
- Brokerage targets diverge as ratings stay positive
- Improving credit quality provides a counterweight
- Conclusion
Axis Bank shares retreat despite annual profit growth
The October 19 quotation was a trading snapshot, not a confirmed closing price. The decline followed results released on October 17 for the quarter ended September 30, 2026, the second quarter of fiscal 2027.
The earnings picture was less strong sequentially than the 38% annual profit increase suggested. Standalone net profit fell from ₹7,114 crore in the preceding quarter to ₹7,003 crore. Operating profit increased 6% year over year to ₹11,083 crore but declined 5% from the June quarter.
The result also landed differently against individual forecasts. Profit missed the LSEG-compiled average estimate, while Jefferies said it exceeded its own forecast. Those differing benchmarks help explain why brokerage assessments were not uniform; the share-price movement alone does not establish a single cause.
| Item | Details |
|---|---|
| Jefferies | Buy maintained; target retained at ₹1,700 per share. |
| Centrum Broking | Buy maintained; target lowered to ₹1,530 from ₹1,630. |
| Dolat Capital | Accumulate maintained; target lowered to ₹1,470 from ₹1,525. |
| 360 One WAM | Buy maintained; target raised to ₹1,590. |
Margin pressure complicates stronger lending growth
Axis Bank’s Q2 FY27 performance highlights showed net interest income rising 12% year over year to ₹15,371 crore, with advances increasing 23% and deposits growing 21%. Core operating profit rose 11% to ₹10,998 crore.
Reported net interest margin was 3.36%, down 10 basis points from the preceding quarter, Centrum Broking noted. Excluding the impact of foreign currency non-resident bank deposits, known as FCNR(B) deposits, the bank reported a margin of 3.47%. Centrum said that adjusted measure improved one basis point sequentially.
The distinction matters because foreign-currency deposit flows affected both headline growth and margins. Excluding advances linked to the relevant FCNR(B) deposits, annual loan growth was 19%, compared with the reported 23%.
Centrum and Dolat Capital both highlighted retail lending growth as important to improving margins. Current and savings account deposits grew 11% year over year and 2% sequentially on a period-end basis, slower than total deposit growth.
Brokerage targets diverge as ratings stay positive
Jefferies retained its Buy rating, pointing to better income and lower provisions than it had expected. It raised core estimates but also incorporated a potential reduction in bancassurance fees from FY28, while noting that clarity was still awaited.
Centrum retained Buy but lowered its target, citing weaker treasury gains, higher operating expenses and the need for sustained retail loan growth. Dolat maintained Accumulate while reducing its target because of concerns about sustainable margins.
360 One WAM retained Buy and raised its target. It said earnings were slightly below its estimate because of lower other income and higher expenses. The brokerage also said the bank remained confident of margin recovery in the second half of FY27 through deployment of surplus liquidity and rate increases. That recovery remains an expectation, not a reported result.
The targets below are brokerage estimates rather than assured future trading prices.
Improving credit quality provides a counterweight
Gross non-performing assets declined to 1.16% of loans, down 30 basis points year over year, while the net bad-loan ratio fell nine basis points to 0.35%.
The annualized net slippage ratio declined 30 basis points to 0.75%, and annualized net credit cost fell 28 basis points to 0.45%. These measures show that the margin debate accompanied improving credit performance rather than a deterioration in reported asset quality.
Conclusion
Axis Bank’s results combined strong annual earnings and improving credit quality with weaker sequential profitability. The next reporting periods will test management’s expectation of a second-half margin recovery, with retail loan growth and the deployment of surplus liquidity central to that assessment.
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