Q1 Disappointment Sinks Axis Bank Share Price by 7% – Is it a Buy Opportunity?
The Axis Bank share dropped nearly 7% after it released its Q1 results. This sharp fall caught many investors off guard. The numbers didn’t meet market expectations, and that triggered a wave of selling.
But here’s the bigger question: Is this a warning sign, or could it be a golden buying opportunity?
Every quarter, investors examine bank results to gauge the economy’s performance. Axis Bank is one of India’s top private banks, so its performance matters. This time, a few weak areas dragged the overall results down. But not everything was negative.
Let’s check out what happened in Q1. We’ll look at the numbers, why the stock fell, and what the future may hold.
Q1 Results Overview
Axis Bank’s Q1 FY26 net profit fell to ₹5,806 crore, down 4% from last year’s ₹6,035 crore. Net interest income (NII) stayed flat at ₹13,560 crore, which is just a 1% increase from last year.
Operating profit rose 14% year-over-year to ₹11,515 crore, thanks to better cost control. But provisions nearly doubled, reaching ₹3,948 crore, which pressed down the bottom line.
The bank also recorded a “technical impact” accounting change that triggered greater slippage recognition, especially in cash-credit and overdraft accounts.
Axis Bank Share: Market Reaction
Shares dropped 7-7.4% during early trade, hitting ₹1,073.95 on BSE before settling around ₹1,114. The fall was fueled by weak margins and asset-quality concerns, leading to a sharp investor sell-off.
Axis Bank became the biggest drag on major indices like Nifty Bank and Sensex Private Bank, with a 4-5% intraday loss, partly following a similar drop in its UK-listed GDRs.
Why Investors Reacted Negatively?
Two main issues stood out:
- Margins under pressure: NIM fell from 4.05% to 3.8%, a 17 bps drop due to tighter spreads and early effects of repo rate cuts.
- Sharply rising slippages: Gross NPAs rose to 1.57% from 1.28%. Net NPA moved up to 0.45%, and slippages jumped 72% sequentially to ₹8,200 crore.
Because of slippages and thicker provisions, analysts called the results weaker than expected.
Axis Bank’s Strengths & Long‑Term Fundamentals
We shouldn’t overlook some bright spots.
- Strong growth in deposits and advances: Total deposits rose 9% and advances 8% year-over-year.
- Robust fee income: Non-interest income rose 25%, with fee income up 10%, driven by retail and third-party products.
- Healthy CASA mix: The current-account and savings-account ratio was 40%, helping maintain stable, low-cost funding.
- Well‑capitalized: Its provision coverage ratio (PCR) stands at 138% of gross NPAs, well above minimums.
Axis compares well with peers like ICICI and HDFC, with solid digital adoption and a strong retail franchise.
Valuation Perspective
After the drop, Axis trades at about 1.4× FY27E book value, roughly a 40% discount to peers. Some brokerages suggest this level may be a support. But margins, provisioning, and execution remain key risks.
Technical Analysis Snapshot
The stock is now hovering around the ₹1,110-1,130 support zone. A sustained breach of ₹1,110 could trigger a move to ₹945; a rebound above ₹1,130 may test ₹1,240-1,260. In the short term, momentum indicators lean bearish but are not yet fully oversold.
Analyst Opinions & Target Price
Brokerages are dialing back forecasts:
- Nuvama downgraded to “Hold,” cut FY26–27 EPS by 5-6%, and revised PT to ₹1,180 from ₹1,400.
- IIFL Capital cut FY26 profit estimates by 12%, expects earnings to recover in FY27. PT is now ₹1,28.
- Motilal Oswal rated “Neutral,” lowered PT to ₹1,250, predicting slippages to stay elevated through Q2.
Risks to Consider
We also must flag some risks:
- Slippages may stay high if economic slowdowns hit retail or unsecured lending.
- Amidst falling rates, NIM could decline further.
- Global shocks or RBI policy shifts might hurt sentiment.
- Other banks may surprise investors, putting Axis at a comparative disadvantage.
Conclusion: Is It a Buy Opportunity?
We see both short-term pain and long-term potential. On the plus side, the slippage rise seems partly technical and one-off. The bank remains well-capitalized, and fundamentals like fee growth, deposits, and CASA are intact.
Valuation now looks reasonable, with a big discount to peers. But pressure on margins and asset quality isn’t gone yet.
Investors who can tolerate volatility and believe in India’s banking story may consider buying on dips around support levels. But cautious investors should wait for clear signs like slowing slippages or margin stabilization before adding.
Frequently Asked Questions (FAQs)
Axis Bank has strong business and growth plans. But recent results were weak. It may be a good buy for long-term investors who can handle short-term risks.
Experts say the stock may recover if profits improve. But if bad loans stay high, it could stay weak. The future depends on better earnings and fewer risks.
The share is falling because Q1 results were poor. Profit dropped, margins shrank, and loan losses rose. Investors got worried and started selling the stock quickly.
After the price drop, Axis Bank looks undervalued compared to rivals. But risks remain. Some analysts say it’s cheap now, while others suggest waiting before buying.
Disclaimer:
This content is for informational purposes only and not financial advice. Always conduct your research.