Axis Bank shares beat HDFC Bank, ICICI Bank in 2025; still a buy?

Axis Bank has outperformed larger peers HDFC Bank and ICICI Bank, delivering a 14.78 per cent return in 2025 so far, compared with gains of 6–11 per cent for its peers over the same period. ICICI Securities, which met the lender’s MD and CEO Amitabh Chaudhry, said it sensed a strategic shift in Axis Bank’s playbook. In a note, the domestic brokerage retained a 'Buy' on the bank but with a lower target of Rs 1,435 from Rs 1,450 earlier. 

On Monday, Axis Bank shares were trading flat at Rs 1,230.95 apiece. ICICI Securities' target hint at 16.57 per cent  upside potential over this price. ICICI Securities said Axis’ stock is trading similar or lower than a few smaller peers due to slower business growth, higher credit costs and volatile execution. Growth concerns seems to be getting addressed, it said adding that it may, however, have some collateral damage on net interest margin (NIM). 

"Axis is seemingly leaning towards prioritising loan growth (possibly over NIM vs earlier stance of NIM over growth). Beyond the recent 25 bps repo rate cut, its rising focus on loan growth, starting with wholesale, is likely to delay NIM recovery, without materially altering NII growth," the brokerage said.

The brokerage raised its FY26 gross slippage estimates, factoring in likely higher technical slippages, which it said is a bit disappointing. That said, the domestic brokerage hopes that the impact on credit cost is lesser. 

The broking firm believes Axis Bank's valuations at 1.5 times estimated FY27 adjusted book value should cushion any downside. 

"That said, an upswing could be swift, if there is reasonable improvement in core slippages, cushioned NIM outcomes and broad-based loan growth. Maintain Buy with the TP trimmed to Rs 1,435," it said.

Apart from agri seasonality, Axis Bank is confident of steady delivery, devoid of any one-offs. The bank should see sharp rise in RoA and RoE in FY27, the brokerage said.

"We believe Axis has shifted its gears on loan growth. The bank had reported lower than systemic growth for the last few quarters, but Q2FY26 saw growth reviving to 12 per cent YoY. Axis sees healthy legs to wholesale growth, while disbursements in chosen retail are rising. We raise FY26E loan growth to 15 per cent YoY vs 12 per cent earlier," ICICI Securities said.