Axis Bank Q3 Results: Profit Beats Estimates, Shares Surge 4%

Introduction

Shares of Axis Bank Ltd. climbed nearly 4 percent on Tuesday, January 27, following the announcement of its third-quarter results for the fiscal year 2026. The private sector lender posted financial figures that surpassed market expectations, particularly in net profit and net interest income. This strong performance prompted a wave of positive responses from brokerage firms, who upgraded their ratings and price targets, citing improved asset quality, stable profitability, and attractive valuations. The stock's immediate surge reflected investor confidence in the bank's operational health and future growth prospects.

Strong Quarterly Performance

For the quarter ending December 31, 2025, Axis Bank reported a standalone net profit of ₹6,490 crore, marking a 3% increase from the ₹6,304 crore recorded in the same period last year. This figure comfortably exceeded the consensus analyst estimate of ₹6,046 crore. On a sequential basis, the profit after tax saw a significant 27% jump from ₹5,090 crore in the September 2026 quarter. The bank's core earnings also showed resilience. Net Interest Income (NII), the difference between interest earned and interest expended, grew by 5% year-on-year to ₹14,287 crore. This growth was supported by a 4.3% YoY increase in total interest income, which reached ₹32,274 crore.

Asset Quality Improves Further

A key highlight of the quarter was the continued improvement in the bank's asset quality. The Gross Non-Performing Assets (GNPA) ratio eased to 1.40% from 1.46% in the previous quarter. Similarly, the Net Non-Performing Assets (NNPA) ratio saw a slight decline to 0.42% from 0.44% sequentially. In absolute terms, gross NPAs decreased quarter-on-quarter, indicating better control over bad loans. The bank's provisioning coverage remained robust, with the Provision Coverage Ratio (PCR) standing at 146% of gross NPAs. Cumulative provisions, including standard asset coverage, were reported at ₹13,111 crore, underscoring a strong buffer against potential credit losses.

Key Financial Metrics for Q3 FY26

Market Reacts Positively

The financial results were well-received by the market. Axis Bank's stock price jumped as much as 4.22% to a day's high of ₹1,311 on the BSE. It was trading at ₹1,306.6, up 3.86%, during early trade. This performance extends a strong run for the stock, which has gained approximately 37.3% over the last 12 months. This return significantly outperforms the benchmark Nifty 50 index, which rose about 9.7% during the same period, highlighting the stock's relative strength and investor favor.

Brokerages Upgrade Outlook

Following the results, several leading brokerages reiterated their positive stance and raised their target prices for Axis Bank. The consensus view pointed towards improving credit cost visibility, resilient profitability metrics, and an attractive valuation.

• Citi upgraded the stock to 'Buy' from 'Neutral' and increased its target price to ₹1,463. The firm highlighted the strong core earnings beat and a stable Return on Assets (RoA) of around 1.5%.

• CLSA maintained its 'Outperform' rating with a target of ₹1,500, calling asset quality the standout feature of the quarter. It noted a sharp decline in gross slippages, excluding technical write-offs.

• Nomura reiterated its 'Buy' call, setting a target price of ₹1,540. The brokerage expects the bank's RoA to improve to 1.7-1.8% over FY27-28, with an estimated earnings CAGR of 26%.

• HSBC and Jefferies also maintained 'Buy' ratings, with target prices of ₹1,580 and ₹1,550, respectively. They cited the profit beat driven by a stronger topline and controlled expenses.

Brokerage Recommendations Summary

Analyst Consensus Reinforces Confidence

The bullish sentiment is widespread among analysts covering the stock. Out of 50 analysts, an overwhelming 44 have issued a 'Buy' recommendation, while the remaining six suggest a 'Hold'. Notably, there are no 'Sell' ratings on the stock, reflecting strong confidence in its strategic direction and financial health following the Q3 performance.

Conclusion

Axis Bank's third-quarter results for FY26 have successfully surpassed market expectations, driven by steady profit growth and a notable improvement in asset quality. The positive market reaction, evidenced by the stock's surge, and the unanimous upgrades from financial analysts underscore a renewed confidence in the bank's trajectory. With strong credit cost visibility, stable return metrics, and a valuation that remains attractive compared to its peers, Axis Bank appears well-positioned to continue its growth momentum.