..... . VALI disclosures . .....: 19/10/26, Axis Bank Q2

Monday, October 19, 2026

19/10/26, Axis Bank Q2

Axis Bank shares plunged 4 percent on Monday, emerging as the top loser on both the Nifty 50 and Bank Nifty following the private sector lender's mixed second-quarter earnings. While brokerages remained broadly positive on the stock's outlook, concerns over pressure on margins, elevated operating expenses and a rising loan-to-deposit ratio weighed on sentiment.

Axis Bank stock fell to Rs 1,238 in morning trade, extending its year-to-date decline to 3 percent, compared with an 11.5 percent fall in the Nifty 50. The bank's market capitalisation stood at approximately Rs 3.86 lakh crore

The decline came after Axis Bank reported a 37.6 percent year-on-year increase in net profit to Rs 7,003.3 crore for Q2 FY27, below the CNBC TV18 poll estimate of Rs 7,132 crore. Net interest income (NII), however, rose 11.8 percent to Rs 15,371.4 crore, exceeding the estimate of Rs 14,970 crore.

The bank's net interest margin (NIM) stood at 3.36 percent, although the figure was 3.47 percent excluding the impact of FCNR-B deposits. Asset quality improved, with the gross NPA ratio declining to 1.16 percent from 1.46 percent a year earlier, while the net NPA ratio fell to 0.35 percent from 0.44 percent.

Axis Bank stock ratings, target prices

Jefferies, JPMorgan, Citi and Bernstein maintained positive recommendations on Axis Bank, although their assessments of underlying earnings quality differed.

Jefferies: Buy, target price Rs 1,700

Jefferies maintained its Buy rating on Axis Bank with a target price of Rs 1,700, implying approximately 32 percent upside from Friday's closing price of Rs 1,290. The brokerage said the bank's core performance exceeded its estimates, supported by stronger revenue and lower provisions. It viewed stable sequential core margins positively, although the drag from FCNR-B deposits was slightly greater than anticipated. Jefferies expects improving margins, lower credit costs and a rebalancing of the loan portfolio to support higher return on equity next year.

JPMorgan: Overweight, target raised to Rs 1,620

JPMorgan raised its target price on Axis Bank to Rs 1,620 from Rs 1,590, retaining its Overweight recommendation. The brokerage said the bank's quarterly earnings exceeded its estimates, aided by stronger NII and lower credit costs. It highlighted healthy loan growth, a marginal recovery in core NIM excluding the FCNR-B impact, and improving asset quality. JPMorgan also cited attractive valuations as a key factor supporting its positive outlook.

Citi: Buy, target price Rs 1,620

Citi maintained its Buy rating on Axis Bank with a target price of Rs 1,620. The brokerage said the headline NIM was affected by FCNR-B deposits, while underlying margins remained stable. It highlighted a sequential moderation in slippages and credit costs, alongside resilient asset quality. Citi also noted its credit growth outpaced industry growth, but flagged elevated operating expenses as a drag on pre-provision operating profit.

Bernstein: Outperform, target price Rs 1,600

Bernstein maintained its Outperform rating on Axis Bank with a target price of Rs 1,600, implying approximately 24 percent upside from Friday's close. The brokerage described the Q2 performance as mixed, saying that a 52 percent year-on-year decline in credit costs supported 37 percent growth in earnings per share, even as underlying operating trends remained weak. Bernstein highlighted strong corporate-led loan growth, which pushed the loan-to-deposit ratio to approximately 95 percent. It also flagged margin compression from FCNR-B deposits, weaker net operating income and higher operating expenses as concerns.

Written by Shaleen Agrawal

Source: Network18

Disclaimer: The views and investment tips expressed by experts here are their own and not those of us. We advise readers&traders to check with certified experts before taking any investment decisions.

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Trade Cycles

The four important features of Trade Cycle are (i) Recovery, (ii) Boom, (iii) Recession, and (iv) Depression!

The trades cycle or business cycle are cyclical fluctuations of an economy. A full trade cycle has got four phases: (i) Recovery, (ii) Boom, (iii) Recession, and (iv) depression. The upward phase of a trade cycle or prosperity is divided into two stages—recovery and boom, and the downward phase of a trade cycle is also divided into two stages—recession and depression.

Phases of Trade Cycle:

The phases of trade cycle are explained with a diagram:

(1) Recovery:

In the early period of recovery, entrepreneurs increase the level of investment which in turn increases employment and income. Employment increases purchasing power and this leads to an increase in demand for consumer goods.

As a result, demand for goods will press upon their supply and it shall, thereby, lead to a rise in prices. The demand for consumer’s goods shall encourage the demand for producer’s goods.

The rise in prices shall depend upon the gestation period of investment. The longer the period of investment, the higher shall be the price rise. The rise of prices shall bring about a change in the distribution of income. Rent, wages, interest do not rise in the same proportion as prices.

Consequently, the margin of profit improves. The wholesale prices rise more than retail prices. The prices of raw materials rise more than the prices of semi-finished goods and the prices of semi-finished goods use more than the prices of finished goods.

(2) Boom:

The rate of investment increases still further. Owing to the spread of a wave of optimism in business, the level of production increases and the boom gathers momentum. More investment is possible only through credit creation. During a period of boom, the economy surpasses the level of full employment and enters a stage of over full employment.

(3) Recession:

The orders for raw materials are reduced on the onset of a recession. The rate of investment in producers’ goods industries and housing construction declines. Liquidity preference rises in society and owing to a contraction of money supply, the prices falls. A wave of pessimism spreads in business and those markets which were sometime before sellers markets become buyer’s markets now.

(4) Depression:

The main feature of a depression is a general fall in economic activity. Production, employment and income decline. The prices fall and the main factor responsible for it is, a fall in the purchasing power.

The distribution of national income changes. As the costs are rigid in nature, the margin of profit declines. Machines are not used to their full capacity in factories, because effective demand is much less. The prices of finished goods fall less than the prices of raw materials.

✳Reality Tips to Traders

1)Trading in the stock market is a marathon. 2)Protecting your capital is key. (Learn to protect first) 3)Making 0 on the day is better than losing 50k 4)Losses happen; they are part of this business. 5)It’s not you vs. the market. It’s you VS you. 6)You are your biggest enemy; learn to be mentally disciplined. 7)Don’t follow the majority; follow the correct path. 8)Traders without a stop loss end up not being traders for long. 9)There is always another trade. 10)The big money is made waiting for the right set-ups. 11)Waiting for the right trade is the most powerful strategy. 12)It is better to cut a loss than to wait to be proven right. 13)Position sizing can make or break you. 14)Worry about the downside before you even think about the upside. 15)Don’t listen to headlines

..BANKING TERMINOLOGY

There are various types of Banks: PSU Banks, Private Banks, Co-operative/Regional Banks, Small Finance Banks and Foreign Banks. When you deposit money in a bank, let's say the bank gives you an interest rate of 4%. But when the bank lends out this money, they lend it out at say, 12%. The difference of 8% in the above scenario is effectively the profit of the bank! The loans that do not pay interest for 90 days are known as Non-performing Assets. Banks have to provide for such bad loans. Structure of a Bank Asset for a Bank: The asset portion of a bank's capital includes cash, government securities, and interest-earning loans (e.g., mortgages, letters of credit, and inter-bank loans). Liabilities for a Bank: The bank's main liabilities are its capital (including cash reserves and, often, subordinated debt) and deposits. The latter may be from domestic or foreign sources (corporations and firms, private individuals, other banks, and even governments). Banks are required to maintain Liquidity with the Reserve Bank of India: SLR (Statutory Liquidity Ratio): It is the money a bank needs to preserve in the form of cash, gold or government Bonds before providing credit customers. This limitation is added by RBI on banks to make funds available to customers on-demand at your earliest convenience. Banks are required to maintain SLR at 18%. CRR (Cash Reserve Ratio): Banks are required to hold a certain proportion of their deposits in the form of cash. Banks don’t hold these as cash with themselves, but deposit such amounts with RBI / currency chests. CRR rate is at 4.5% currently. Repo Rate: The rate at which the RBI lends short-term money to the banks. The RBI through its Monetary Policy committee changes the repo rate to balance growth and Inflation. Reverse Repo rate: The rate at which banks park their short-term excess liquidity with the RBI. Now let us understand various terminologies for Banks Net Interest Income (NII): This is the spread the bank makes on its lending. It is calculated as Interest Income – Interest Expended Net Interest Margin (NIM): This is the spread the bank makes on its lending. It is the earning which is left after deducting the cost paid to depositors from its yields on Loans. This is denoted in % terms. The formula is Yield on Loans – Cost of funds Capital Adequacy Ratio (CAR): The capital adequacy ratio (CAR) is a measure of a bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures. Essentially, it is the Capital that is available to lend. Tier I Capital – In simple words this capital is freely available with the bank to lend out. Tier II Capital- This is the capital tied up somewhere and is less freely available to lend. In case of an adverse event, the bank can use this capital to lend. Under Basel III norms, a bank’s tier 1+tier 2 capital must be a minimum of 8% of its risk-weighted holdings. The minimum capital adequacy ratio, also including the capital conservation buffer, is 10.5%. Current Account Saving Account (CASA)- There is no interest paid on the Current Account and a small interest rate is paid on a savings account. The combination of both is called CASA which shows the liabilities of the bank on which it pays relatively less interest. Deposits: Bank deposits are a savings product that customers can use to hold an amount of money at a bank for a specified length of time. In return, the financial institution will pay the customer the relevant amount of interest, based on how much they choose to deposit and for how long. Now let us come to NPA. Gross NPA (GNPA): It is the total loans on which no payment has been paid for 90 days or more. GNPA % is usually shown in each Bank’s quarterly results. The percentage is basically the GNPA amount as a % of the total advances. Slippages: Slippages denote the fresh amount of loans that have turned bad in a year. The slippage ratio of a bank is calculated as Fresh accretion of NPAs during the year /Total standard assets at the beginning of the year multiplied by 100. Provisioning Coverage Ratio (PCR): This is the ratio of provisioning to GNPA and indicates the extent of funds a bank has kept aside to cover loan losses. For Instance, a company has GNPAs of Rs 100 and they have set aside 50 Rs, then the PCR is 50%. Net NPA (NNPA): The total figure left after deducting provisions made for bad loans from GNPA. (GNPA – Provisions+upgrades/writeoffs = NNPA) Special Mention Account (SMA) SMA-0 is a category in which stress with respect to the principal and interest has remained overdue for a period of 0 to 30 days. SMA-1 is a category in which stress with respect to the principal and interest has remained overdue for a period of 30-60 days. SMA-2 is a category in which stress with respect to the principal and interest has remained overdue for a period of 60-90 days

..... . VALI disclosures . .....

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