Fri Jan 17 12:27:37 UTC 2025: ## Axis Bank’s Disappointing Q3 Results Trigger Analyst Downgrades

**Mumbai, [Date]** – Axis Bank’s underwhelming performance in the December quarter (Q3FY25) has prompted several analysts to downgrade their earnings estimates for the bank. The results fell short of expectations across key parameters, leading to concerns about the bank’s near-term outlook.

Key weaknesses highlighted include a significant jump in slippages, primarily driven by the agriculture and unsecured loan segments. Axis Bank also reported the highest credit cost among the top five Indian banks and the slowest deposit growth. While Q3 earnings appeared inline due to lower operating expenses offsetting higher provisions, analysts remain cautious.

MOFSL, for example, noted a slight deterioration in asset quality, with rising slippages despite stable NPA ratios. The brokerage attributed the increased credit cost to a tightened provisioning policy. Muted deposit growth, coupled with a 9% year-on-year advance growth, resulted in a high credit-to-deposit ratio (92.6%), potentially constraining future credit expansion. MOFSL reduced its FY26 and FY27 earnings estimates by 4-5% and set a target price of Rs 1,175.

Nuvama also expressed concern, citing a sharp rise in slippages (to 3.6% of lagged loans from 3.1% QoQ) and a decline in net interest margin (NIM). They highlighted that lower operating expenses were the primary driver of pre-provision operating profit (PPoP). Nuvama lowered its EPS estimates and reduced its target price to Rs 1,220 from Rs 1,335.

Arihant Capital Markets echoed these concerns, describing the results as “slightly below estimates” and pointing to the slowest quarterly growth in several quarters. The bank’s management cited a bleak macroeconomic environment impacting customer asset growth. Despite this, Arihant maintained a relatively optimistic outlook, setting a target price of Rs 1,383.

The overall consensus among analysts is that while the immediate outlook remains subdued due to macroeconomic headwinds, the downside risk for Axis Bank stock from current levels appears limited. However, investors are advised to closely monitor the bank’s progress in addressing its challenges related to asset quality, deposit growth, and credit cost.

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