Axis Bank Share Price Drops 7% After Q1 Results

Axis Bank’s stock dropped by 7% right after it announced its Q1 FY26 results. The numbers were out on July 24, 2025, and the market didn’t take them well. Even though profits were up year-on-year, the stock saw its sharpest single-day fall in months.

We saw investors reacting to weak margins, a dip in return ratios, and flat quarter-on-quarter profits. It wasn’t just a number miss; the drop showed that the market expected better.

We’ll study what the Q1 report showed, where the pressure points were, and how it compared to past quarters and rival banks. No opinions, just numbers, facts, and financial breakdowns. Let’s get into the data that triggered this 7% fall.

Q1 FY26 Earnings Snapshot

• Profit: ₹5,806 crore — down 3.8% YoY.
• Net Interest Income (NII): Marginal rise of 0.8% YoY to ₹13,560 crore.
• Net Interest Margin (NIM): Slipped to 3.80%, from 4.05% a year earlier and 3.97% last quarter.
• Operating profit: Grew 14% YoY to ₹11,515 crore.
• Core operating profit: Rose 5% to ₹10,095 crore.

Asset Quality & Credit Growth

•  Gross NPA increased from 1.28% to 1.57% during the quarter.
• Net NPA climbed from 0.33% to 0.45% during the same timeframe.
• Provisions: Spiked to ₹3,948 crore, almost double last year’s ₹2,039 crore.
• Technical impact: ₹821 crore was a one-off provision due to updated NPA recognition standards.
• The provision coverage ratio remained high at 138% of total gross NPAs.

Stock Performance Breakdown

• In early trading, the stock dropped 7.4% to ₹1,073.95 on the BSE.
• Closing price: Recovered to around ₹1,109–₹1,114, still about 4–6% down.

• Market cap: Dropped by ~₹3.45 lakh crore in value.
• Broader markets: Nifty 50 fell ~0.4% and banking indices dropped 0.5–1.1% on the news.

Analyst Breakdown (Neutral Tone)

• IIFL: Attributed slippages to technical adjustments and elevated credit costs; forecast 1.5% credit cost vs 1.2% ex-technical; trimmed FY27 EPS by ~4–8%.
• Dolat Capital: Noted 70% of book on floating rates; flagged margin pressure; revised estimates lower, kept “Accumulate” with ₹1,250 target.
• Nuvama: Slippage concerns led to a “Hold” rating with ₹1,180 target; flagged soft retail growth.
• BOBCaps: Highlighted new asset standards and higher credit costs as key issues.
  (Note: Ratings mentioned for context, no recommendations included.)

Technical Chart & Trading Sentiment

• 200‑day MA: The stock fell below this long-term average (~₹1,100) for the first time since April.
• Support level: Weekly trendline near ₹1,077—may act as short-term support.
• FII/DII trading: Heavy selling by financial institutions, visible in banking index performance.

• Axis trails behind its peers in both net interest margin (3.8%) and asset quality.
• Other private banks also saw downward pressure, but Axis was hit hardest due to the provision shock.

Macroeconomic & Sector Context

• Interest environment: RBI paused rate cuts; loan rates slow to adjust.
• Sectoral NPA trend: Microfinance and unsecured loans under pressure.
• Axis Bank’s decline contributed to the third straight weekly fall in both the Nifty and Sensex indices.

Conclusion

Axis Bank’s 7% drop in share price was driven by lower margins, increased provisions, and the impact of new NPA recognition norms. Profits declined by 4%, net interest margin narrowed, and signs of weakening asset quality emerged. There was weakness in the technical charts along with pressure from the broader market. Compared to peers, Axis was more exposed this quarter.

This quarter appears as a technical setback, but the bank continues to grow its loan book and fee income. Its share remains under pressure given the margin and NPA trends. Yet the long-term fundamentals, like deposit growth and operating profit, are still solid. And as we saw, broader banking peers didn’t face as steep a fall.

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This content is for informational purposes only and not financial advice. Always conduct your research.