Anand Rathi highlighted Axis Bank's 19% year-on-year loan growth and 18% deposit expansion in a recent report. While the bank faces margin pressure and higher slippages than some competitors, the brokerage notes a valuation discount compared to peers like HDFC Bank and ICICI Bank. Investors may monitor future margin recovery and credit cost moderation as key performance drivers.
Anand Rathi has published a new assessment of Axis Bank, noting that the private lender is currently growing its loan book at 19% year-on-year. This expansion rate is currently faster than the broader banking system and several major competitors, including HDFC Bank and Kotak Mahindra Bank. Alongside this credit expansion, the bank also reported an 18% year-on-year increase in deposits, which the brokerage suggests is a positive indicator of the bank's current ability to mobilize funds.
Margin Trends and Asset Quality
While growth metrics remain strong, the bank's financial performance shows some pressure points. The net interest margin (NIM)—a key measure of the difference between interest earned on loans and interest paid on deposits—declined by 16 basis points quarter-on-quarter to reach 3.46%. This dip is primarily due to the bank repricing its loans downwards and a shift toward a higher share of corporate lending. Additionally, while overall asset quality has remained steady, the bank recorded higher gross and net slippages compared to some of its peer institutions, a factor that investors may want to watch closely in coming quarters.
Operational Efficiency and Future Targets
Despite the margin compression, the bank has successfully improved its operational efficiency. The ratio of operating expenses to total assets fell by 26 basis points in the most recent quarter. Looking at the long-term outlook, analysts expect the bank to maintain a growth trajectory that leads the industry by roughly 100 to 150 basis points. The firm projects that as margins stabilize and credit costs decrease, the return on equity (RoE) could reach approximately 15% by fiscal year 2028, up from the 12.7% levels seen in fiscal year 2026.
Valuation and Market Position
In terms of valuation, Axis Bank currently trades at a price-to-adjusted-book-value (P/ABV) ratio of 1.4 times based on fiscal year 2028 estimates. This indicates a valuation discount of about 20% compared to peers such as ICICI Bank, HDFC Bank, and Kotak Mahindra Bank. The analyst report values the core banking business at 1.7 times its estimated book value, with additional value derived from the bank's various subsidiaries. Investors should keep track of the bank's ability to manage its slippage levels and improve its margins in upcoming quarterly filings to see if these projections hold true.