Axis Bank Q1FY25 Results Preview: Expected Double-Digit Growth

Axis Bank Limited, previously known as UTI Bank, is a major Indian multinational bank and financial services provider which ranks as the third-largest private sector bank in India by assets and the fourth-largest by market capitalization. 

Market Expectations 

Axis Bank is anticipated to report strong growth in its Q1FY25 results, along with a rise in both profit and Net Interest Income (NII). Scheduled for release today, an average of eight brokerages have forecasted for the company to achieve a 13% year-on-year (YoY) increase in profit, reaching Rs.6,576 crore compared to Rs.5,797 crore in Q1FY24. NII is also projected to climb by 12% YoY, amounting to Rs.13,361 crore in Q1FY25, up from Rs.11,958 crore in Q1FY24.

Drivers of Earnings Growth

Several key factors are contributing to this anticipated earnings growth:

1. Strong Loan and Deposit Expansion: Axis Bank’s advances are expected to grow by 13.5% YoY, reaching Rs.9.74 lakh crore in Q1FY25. Similarly, deposits are projected to rise by 12.3% YoY, totaling Rs.10.5 lakh crore. This strong loan and deposit growth is pivotal in driving the bank’s overall performance, as noted by analysts.
2. Improving Asset Quality: The bank’s asset quality is showing promising signs of improvement. The gross non-performing assets (NPA) are forecasted to decline to 1.5% in Q1FY25, down from 1.7% a year earlier. Additionally, the net NPA is expected to improve to 0.3%, from 0.4% in Q1FY24, according to the analysts.
3. Margin Contraction: Despite the overall positive outlook, analysts predict a 6 basis points YoY contraction in margins, expected to be 4.04% in Q1FY25 compared to 4.1% in Q1FY24. This margin squeeze is attributed to rising funding costs.

Conclusion: So far in 2024, Axis Bank’s stock has surged over 14%, outperforming the Nifty 50’s 12% rise. Investors and analysts will be closely monitoring the bank’s margin outlook, slippages in the unsecured segment, deposit mobilization, and asset quality trends for the rest of the fiscal year.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.