Axis Bank shares fall 6% after Q1 results; Analysts cite multiple concerns on NIMs, NPAs

Axis Bank shares fell as much as 6% on Friday, July 18, after they were downgraded by brokerage firms Nuvama and JPMorgan, in response to the lender's quarterly results that were reported after market hours on Thursday.

Nuvama has downgraded the stock to "hold" from its earlier recommendation of "buy", and also cut its price target to ₹1,180 from ₹1,400 earlier. The revised price target is nearly at the same levels at which the stock closed on Thursday before the results were announced.

The other brokerage to downgrade Axis Bank is JPMorgan, who also downgraded the stock to "neutral" from "overweight", while slashing its price target to ₹1,265 from ₹1,315 earlier.

Nuvama wrote in its note that Axis Bank's Net Interest Margins (NIMs) fell 17 basis points sequentially, even when the lender has been the slowest in passing the RBI rate cuts to its customers.

After the results, Nuvama has cut its financial year 2026 to 2027 Earnings Per Share (EPS) estimates by 5% and 6% respectively.

JPMorgan has cut Axis Bank's Earnings Per Share (EPS) forecasts by 9%, 4% and 4% respectively for financial years 2026, 2027 and 2028. It cited limited upside potential as the key reason behind downgrading the stock.

On the flip side, Bernstein has retained its "outperform" rating on the lender, with a price target of ₹1,300 per share.

Bernstein said that Axis Bank reported yet another poor quarter, but it is hard to imagine that this is not the bottom, even as it tests the limits of "but its cheap" argument.

The most concerning factor, according to Bernstein, besides the sharp fall in NIMs, is the deterioration in asset quality, even after accounting for the technical impact.

CLSA too has maintained its "outperform" rating on Axis Bank and cut its price target to ₹1,350 from ₹1,400. Adjusting for interest reversals, NIMs were down only 13 basis points sequentially.

Investec has retained its "buy" rating on the stock with a revised price target of ₹1,350 from ₹1,430 earlier. It expects Axis Bank to deliver Return on Assets (RoA) and Return on Equity (RoE) of 1.4% and 14% respectively in financial year 2027. It also believes that valuations are inexpensive.

Out of the 52 analysts that have coverage on Axis Bank, 42 of them continue to maintain a "buy" rating on the stock, while 10 have a "hold" rating. No analyst tracking the stock has a "sell" recommendation on it.

Shares of Axis Bank have opened 6% lower and are now trading at ₹1,090. The stock is still significantly higher than its 52-week low of ₹933.5.