Stock Falls 6%: Axis Bank’s share price plunged to ₹1,125 after posting lower-than-expected net profit and weak operating metrics in Q1 FY26.
Profit Misses Estimates: The bank reported a net profit of ₹5,799 crore, missing Street expectations due to higher provisions and slower fee income growth.
Analyst Sentiment Turns Cautious: Multiple brokerages have downgraded the stock outlook, citing margin pressures and muted near-term growth in core banking income.
Axis Bank share price fell sharply by nearly 6% on July 18, 2025, following its Q1 FY26 earnings report, which was released after market hours on July 17. As of 12:50 PM, the stock was trading at Rs. 1,110.60, down 4.24% from the previous close of Rs. 1,159.80. The stock opened the session at Rs. 1,090.00 and touched an intraday low of Rs. 1,086.00 before mildly recovering.
This sell-off came amid downgrades from key brokerages like Nuvama and JPMorgan. They raised concerns around the bank's Net Interest Margins (NIMs) and asset quality deterioration.
Nuvama downgraded Axis Bank from a ‘Buy’ to a ‘Hold’ and slashed its price target from Rs. 1,400 to Rs. 1,180, close to July 17 closing price. It also revised down its EPS forecasts for FY26 and FY27 by 5% and 6%, respectively, citing a 17 bps sequential fall in NIMs, despite Axis Bank being relatively slow in passing RBI’s rate cuts to borrowers.
JPMorgan echoed this cautious tone by downgrading the stock to ‘Neutral’ from ‘Overweight’ and cut its target to Rs. 1,265 from Rs. 1,315. The brokerage reduced EPS estimates by 9%, 4%, and 4% for FY26, FY27, and FY28, respectively. It flagged limited upside potential and growing pressure on margins as key factors for the rating cut.
While some brokerages are turning cautious, others remain optimistic. Bernstein maintained its ‘Outperform’ rating with a target of Rs. 1,300, acknowledging a poor quarter but suggesting the worst may be priced in. Bernstein’s primary concern was not just the NIM drop but also the worsening asset quality, despite accounting for technical reversals.
Similarly, CLSA retained its ‘Outperform’ rating, trimming its target price from Rs.1,400 to Rs. 1,350. It noted that NIM contraction was 13 bps after adjusting for interest reversals. Investec also stuck to a ‘Buy’ call, with a revised target of Rs. 1,350, expecting the bank to post 1.4% RoA and 14% RoE in FY27, and describing the valuation as ‘inexpensive.’
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Axis Bank shares now trade at a TTM PE of 12.28, well below the sector average of 20.41, and a P/B of 2.01, which is in line with historical norms. The book value per share stands at Rs. 552.65. With the stock’s 52-week high at Rs. 1,309 and low at Rs. 933.50. The current levels suggest a potential accumulation zone for long-term investors, if fundamentals stabilize.
Axis Bank share price chart on TradingView shows a decline of 4.84% as of 1.24 PM:
The stock is still rated favorably by analysts, with 63% recommending a Buy, 21% suggesting Outperform, and none advising Sell. Trading volumes spiked today, with 26.6 million shares exchanged by mid-day, far exceeding the 20-day average of 5.8 million.
Axis Bank’s Q1 update has raised valid concerns about margin compression and asset quality, which are leading analysts to revise growth expectations downward. However, the consensus still leans bullish in the long term, assuming the Q1 miss is a temporary setback.
The bank's current valuations and fundamentals could offer a risk-reward opportunity, but further clarity on NIM trajectory and NPA management will be crucial in shaping investor confidence ahead.
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1. Why did Axis Bank shares fall after the Q1 FY26 results?
Axis Bank shares fell nearly 6% after the Q1 FY26 results due to a sequential drop of 17 basis points in Net Interest Margins (NIMs) and rising concerns over asset quality. Analysts from Nuvama and JPMorgan downgraded the stock, citing lower earnings visibility and limited margin upside, triggering investor concerns and a sharp decline in the share price.
2. What did analysts say about Axis Bank’s performance in Q1 FY26?
Analysts were mixed in their views. Nuvama and JPMorgan downgraded the stock, cutting earnings forecasts and flagging concerns on NIMs and asset quality. However, CLSA, Bernstein, and Investec retained their positive outlook, calling the quarter weak but not reflective of the long-term fundamentals. Some expect a recovery in return ratios by FY27.
3. What are Axis Bank’s valuations after the Q1 earnings report?
Post-decline, Axis Bank trades at a trailing PE of 12.28 and a price-to-book ratio of 2.01. These figures suggest it is attractively valued compared to the sector PE of 20.41. With a 52-week range of Rs. 933.50 to Rs. 1,309, current prices may present a long-term buying opportunity if the bank stabilizes margins and improves asset quality.
4. Did all brokerages downgrade Axis Bank after the results?
No, not all brokerages downgraded Axis Bank. While Nuvama and JPMorgan issued downgrades and cut target prices, firms like CLSA, Bernstein, and Investec maintained ‘Buy’ or ‘Outperform’ ratings. They believe the current valuation reflects near-term risks and expect performance to improve over the next 12 to 18 months.
5. What is the outlook for Axis Bank in the near term?
In the near term, Axis Bank may face continued pressure due to margin compression and asset quality issues flagged in Q1. However, analysts remain divided. Some see the recent decline as a short-term setback, while others advise caution until key financial metrics stabilize. Investor sentiment will likely depend on improvements in NIM and NPA trends.