Axis Bank Share Price Drops After Q1 FY26 Earnings Miss: Should You Buy or Hold?
Axis Bank Q1 FY26: A Mixed Bag of Strong Revenues but Weak Profitability
Axis Bank’s Q1 FY26 earnings have offered a mixed view for investors, as the lender reported a 4% YoY drop in net profit despite solid growth in revenue and other income. The markets responded with a mild correction, reflecting investor disappointment over the sharp rise in bad loan provisions and a dip in key profitability metrics.
- Latest Share Price (July 17, 2025): ₹1,159.85, down ~0.7% on the day
- 52‑Week High/Low: ₹1,318 / ₹934
- Volumes: Approx. 74k shares (vs. 189k average)
- 1-Year Range: ₹934 – ₹1,318
- Market Sentiment: Cautious to Neutral after earnings
- P/E Ratio: ~12.8x; P/B: ~1.9x
- Dividend Yield: ~0.09% (₹1/share in July 2025)
Key Q1 FY26 Financial Highlights – Axis Bank
| Metric | Q1 FY26 | Q1 FY25 | YoY Change |
|---|---|---|---|
| Net Profit | ₹5,806 crore | ₹6,035 crore | ▼ 3.8% |
| Net Interest Income (NII) | ₹13,560 crore | ₹13,448 crore | ▲ 0.8% |
| Operating Revenue | ₹20,818 crore | ₹19,232 crore | ▲ 8% |
| Other Income | ₹7,258 crore | ₹5,783 crore | ▲ 25% |
| Fee Income | ₹4,920 crore (est.) | ₹4,470 crore (est.) | ▲ 10% |
| Trading Income | ₹1,420 crore | ₹406 crore | ▲ 249% |
| Operating Profit | ₹11,515 crore | ₹10,106 crore | ▲ 14% |
| Operating Expenses | ₹9,303 crore | ₹9,125 crore | ▲ 2% |
| Provisions | ₹3,948 crore (est.) | ₹2,039 crore | ▲ 94% |
Fundamentals & Valuation
- P/E: ~12.8–12.9×
- Book Value: ~₹604/share, P/B ~1.9×
- ROE: ~16.3%
- Dividend Yield: ~0.09% (last dividend ₹1 on July 4, 2025)
- Analyst Target: Median ~₹1,396 (high ₹1,691, low ₹1,159)
- Intrinsic Value Estimate: ~₹1,564, indicating ~25% discount to current ₹1,160
What Drove the Performance?
Positives:
- Revenue growth remained robust, led by a 25% jump in other income, especially from trading gains (↑249%) and fee income (↑10%).
- Operating profit growth (↑14%) outpaced expenses, indicating solid core business momentum.
- Asset growth continued with total assets rising to ₹16.03 lakh crore, and advances up ~14% YoY.
Negatives:
Net Profit fell 3.8% YoY, missing LSEG analyst expectations (₹6,373 crore).
Net Interest Margins (NIMs) likely compressed, affecting interest income.
Bad Loan Provisions nearly doubled to ₹3,948 crore amid rising slippages.
Return ratios dropped:
- RoA slipped to 1.47% (vs. 1.65%)
- RoE dipped to 13.14% (vs. 16.26%)
Share Price Technicals: Range-Bound But Weak Bias
| Technical Indicator | Signal |
|---|---|
| Support Level | ₹1,140 – ₹1,160 |
| Resistance Level | ₹1,200 – ₹1,250 |
| 20-Day EMA | Near ₹1,175 |
| RSI (14-Day) | Around 44–46 (Neutral) |
| Momentum | Weak – sideways channel |
The stock is consolidating near its 200-day EMA, and a break below ₹1,140 could trigger deeper correction toward ₹1,100–₹1,080 levels. Recovery past ₹1,200 could indicate reversal.
Axis Bank Valuation vs. Peers (As of July 2025)
| Metric | Axis Bank | HDFC Bank | ICICI Bank |
|---|---|---|---|
| Price-to-Earnings | 12.8x | 17.4x | 19.2x |
| Price-to-Book | 1.9x | 2.6x | 3.1x |
| RoE (%) | 13.1% | 17.6% | 18.3% |
| Net NPA (%) (est.) | ~0.36% | ~0.3% | ~0.45% |
Insight: Axis Bank remains attractively valued compared to peers but lags in profitability and return metrics post-Q1.
Expert Outlook: What Analysts Say
- Motilal Oswal: “Maintain BUY with a target of ₹1,450; expect profitability recovery in H2 FY26.”
- Prabhudas Lilladher: “Earnings miss is temporary; expect recovery by Q3. Upside target ₹1,500.”
- Nomura India: “Risk of elevated provisions remains. Prefer ICICI over Axis for now.”
Investment Advice: What Should Investors Do?
Long-Term Investors
- Advice: Hold; consider buying on dips below ₹1,140.
- Rationale: Core metrics are strong. Revenue and operating income growth provide visibility. Valuations are still attractive (~25% below intrinsic value), but clarity on slippages is needed.
Medium-Term Traders
- Advice: Watch support at ₹1,140 and resistance at ₹1,200.
- Rationale: Use a stop-loss strategy if buying in this zone. RSI is neutral. Wait for a breakout for trend confirmation.
Short-Term Speculators
- Advice: Avoid aggressive entry; volatility expected post-results.
- Rationale: Earnings miss and higher provisions may lead to choppy price action in coming weeks.
Final Thoughts
Axis Bank’s Q1 FY26 results are a reminder that earnings resilience and risk management go hand in hand. While revenue and fee income performance were commendable, the dip in profit and return ratios raises short-term caution. Long-term investors can stay invested, while short-term participants should wait for technical confirmation.
With asset growth intact and sector-wide improvement likely in H2 FY26, Axis Bank remains a core banking stock to watch—provided it reins in provisioning and revives margins.