Axis Bank preferred pick by Centrum within banking space; target ₹1,460
Centrum has assigned 'Buy' rating on Axis Bank, calling it a preferred pick from the banking space. The brokerage has set a target price of ₹1,460
 "Axis Bank preferred pick by Centrum within banking space; target ₹1,460")
Axis Bank share price target Centrum has picked Axis Bank as its preferred stock pick from the banking space on signs of bottoming out of net interest margin (NIM) and stabilising asset quality. The brokerage has assigned a 'Buy' call on Axis Bank for a target price of ₹1,460.
Axis Bank shares on Tuesday (February 17) closed at ₹1,354. The target implies an upside of nearly 8 per cent from the previous close. Axis Bank has outperformed the markets in the last one year by yielding a return of 36 per cent versus 9.8 per cent rise in the BSE Sensex and 22 per cent gain in the BSE Bankex. It is the fourth largest private lender in terms market capitalisation at ₹4.21 trillion, according to BSE data.
Axis Bank stock movement in last 1 year
"Sector NIMs showed clear signs of bottoming out and began improving during the quarter, supported by easing cost of funds, favorable deposit repricing, and balance sheet optimisation, with Axis Bank guiding for stable to improving margin trajectories," Centrum said in its latest report on the sector.
In the third quarter (Q3FY26), Axis Bank reported a net profit of ₹7,010.65 crore, up from ₹6,742.99 crore clocked in the year-ago period. On the asset quality front, its new slippages grew to ₹6,003 crore from ₹5,432 crore in the year-ago period and ₹5,696 crore in the quarter-ago period. These included ₹1,698 crore in technical impact for the third consecutive quarter.
The lender exuded confidence that asset quality has stabilised and that the bank is witnessing improvement on other fronts such as credit costs.
The brokerage said that Axis Bank and other universal banks continue to operate in a steady, low-NPA environment.
Axis Bank reported NIM of 3.64 per cent in Q3FY26, down 9 bps Q-o-Q. Centrum said that the management has indicated that NIM has likely bottomed out and maintained guidance of 3.8 per cent for Q4.
"Improving funding dynamics, stable asset quality, and sustained credit growth reinforce a constructive outlook for the sector, with Axis Bank remaining our preferred pick among universal banks," the brokerage said, adding that Equitas Small Finance bank (SFB) and Suryoday SFB are top picks within the SFB space.
On SFBs, Centrum said that they operate at structurally higher spreads and also reported margin expansion in the third quarter.
Ujjivan SFB's NIM, it said, increased to 8.2 per cent versus 7.9 per cent in the preceding quarter, following deposit rate cuts, with management guiding for stable margins around current levels.
Equitas SFB NIM increased sharply from 6.29 per cent to 6.72 per cent on the back lower CoF and growth in MFI book. Management stated NIMs is expected to remain stable in this range for next few quarters, the brokerage said.
Ujjivan SFB target price: ₹73 (upside of 16 per cent from Tuesday's close of ₹62.55)
Equitas SFB target price: ₹80 (upside of 16 per cent from Tuesday's close of ₹68.80) =========================================================== Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.