Fri Jan 17 04:00:00 UTC 2025: ## Axis Bank Q3 Results Disappoint Analysts, Leading to Downgrades

**MUMBAI** – Axis Bank’s underwhelming Q3 FY25 earnings have prompted several analysts to downgrade their forecasts for the bank. The results fell short of expectations across multiple key parameters, triggering concerns about the bank’s future performance.

Key weaknesses highlighted include a significant jump in slippages, particularly in the agriculture and unsecured loan segments. Credit costs reached the highest among India’s top five banks, while deposit growth remained the slowest. Although Q3 earnings appeared inline due to lower operating expenses offsetting higher provisions, analysts expressed concern about the underlying trends.

MOFSL, for instance, noted a deterioration in asset quality despite stable NPA ratios. The brokerage attributed the rise in credit cost to a tightened provisioning policy and cited muted deposit growth alongside strong advance growth (9% YoY) resulting in a high Current Account/Savings Account (CASA) ratio of 92.6%. This high ratio, they warn, could constrain future credit growth. MOFSL lowered its FY26 and FY27 earnings estimates by 4-5% and set a target price of Rs 1,175.

Nuvama echoed similar concerns, pointing to a sharp increase in slippages (3.6% of lagged loans from 3.1% QoQ) and a decline in net interest margin (NIM). They highlighted the lower operating expenses as the main driver of pre-provision operating profit (PPoP) and cut their EPS estimates, setting a revised target price of Rs 1,220.

Arihant Capital Markets also expressed disappointment, describing the results as “slightly below estimates” with the slowest quarterly growth in recent history. They attributed the weakness to a challenging macroeconomic environment and maintained a more optimistic target price of Rs 1,383.

The overall consensus points towards a near-term slowdown for Axis Bank, with concerns revolving around asset quality, credit growth, and margin pressures. While some analysts see limited downside risk from current levels, the underwhelming Q3 performance casts a shadow over the bank’s immediate future.

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