In its latest equity research note, ICICI Securities has reaffirmed a bullish stance on Axis Bank, projecting an upside potential of up to 21% from current levels. The brokerage cites a combination of strong fundamentals, healthy loan growth, and improving margins as reasons behind the optimistic outlook.
Here are the top three reasons why ICICI Securities sees Axis Bank as a strong investment bet in the current market environment:
📈 1. Sustained Loan Growth and Retail Momentum
Axis Bank has shown double-digit loan growth year-on-year, particularly driven by the retail and SME segments. The bank's ability to maintain asset quality while expanding its loan book is a positive sign for long-term investors.
Retail loans grew ~17% YoY
Strong traction in secured lending (home, auto, and gold loans)
SME and commercial banking divisions outperform peers
💰 2. Improving Net Interest Margin (NIM)
Axis Bank has been consistently expanding its NIMs, aided by a stable deposit base and efficient cost management. The bank’s margin profile is expected to improve further due to rising yields on advances and a more favorable interest rate outlook.
Reported NIM: ~4.1%
Lower cost of funds through CASA and digital channels
Positive NIM guidance for FY25
📊 3. Strong Capital Position and Asset Quality
Axis Bank maintains a robust capital adequacy ratio (CAR), providing cushion for future growth. Moreover, the bank's gross and net NPAs continue to decline, reflecting a healthier balance sheet.
Gross NPA: 1.43% | Net NPA: 0.36% (as of Q4 FY24)
Provision coverage ratio >75%
Credit costs remain low and manageable
💼 Valuation & Target Price
ICICI Securities values Axis Bank using a price-to-book multiple of ~2.2x FY26E adjusted book value, resulting in a target price of ₹1,340, which implies a 21% upside from the current market price of ~₹1,105 (as of June 2025).
❓ FAQ Section
Q1: What is the target price of Axis Bank according to ICICI Securities?
A: ICICI Securities has set a target price of ₹1,340 for Axis Bank, implying a potential upside of around 21%.
Q2: Why is Axis Bank stock expected to rise?
A: The rise is expected due to strong retail loan growth, expanding margins, and improving asset quality.
Q3: How is Axis Bank performing in terms of asset quality?
A: Axis Bank has seen a decline in NPAs and maintains a strong provision coverage ratio, signaling a stable and healthy loan book.
Q4: Is Axis Bank a good long-term investment?
A: Based on current fundamentals and growth metrics, Axis Bank is considered a strong long-term buy by several brokerages including ICICI Securities.
Q5: What sectors are contributing most to Axis Bank’s growth?
A: Retail banking, SME lending, and secured loan segments (like home and auto loans) are driving the majority of the growth.
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Reported by Benny on June 25, 2025.
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