Axis Bank Q3 Results Propel Stock 4%; Brokerages Raise Targets

Introduction

Shares of Axis Bank Ltd. surged by nearly 4% on Tuesday, January 27, 2026, following the announcement of its third-quarter financial results for fiscal year 2026. The private sector lender posted a net profit and net interest income that surpassed market expectations, leading to a strong positive reaction from investors and analysts. The robust performance, particularly in asset quality management, prompted several brokerage firms to upgrade their ratings and increase their price targets for the stock, signaling confidence in the bank's future earnings visibility and operational stability.

Stellar Q3 Financial Performance

Axis Bank reported a 3% year-on-year (YoY) increase in its standalone net profit, which stood at ₹6,489.6 crore for the quarter ending December 31, 2025. This figure comfortably exceeded the consensus analyst estimate of ₹6,046 crore. On a sequential basis, the profit after tax saw a significant jump of 27% from the preceding quarter.

The bank's core earnings also showed healthy growth. Net Interest Income (NII), the difference between interest earned and interest expended, grew by 5% YoY to ₹14,286.4 crore, also beating Street expectations. This growth was supported by a 14% YoY increase in overall advances. However, the Net Interest Margin (NIM) experienced some compression, settling at 3.64% for the quarter.

Asset Quality: The Standout Feature

A key highlight of Axis Bank's Q3 performance was the notable improvement in its asset quality. The Gross Non-Performing Assets (GNPA) ratio eased to 1.40% from 1.46% in the September 2025 quarter. Similarly, the Net Non-Performing Assets (NNPA) ratio declined to 0.42% from 0.44% sequentially. This improvement indicates better control over bad loans and enhanced recovery processes. The bank's provision coverage ratio remained strong at 146% of gross NPAs, providing a substantial cushion against potential loan defaults.

Market Reacts with Enthusiasm

The financial markets responded positively to the better-than-expected results. On January 27, Axis Bank's stock climbed as much as 5.4%, reaching a day's high of ₹1,326 on the NSE. The stock became the top gainer among the Sensex and Nifty indices during morning trade. This rally extended the stock's strong performance over the past year, during which it has gained over 37%, significantly outperforming the Nifty 50's 9.7% rise in the same period. The trading session saw heavy volumes, with more than 11.7 million shares changing hands, approximately 2.4 times the 30-day average.

Brokerages Turn More Bullish

The strong quarterly report card led to a wave of positive commentary and target price revisions from leading brokerage houses. The consensus among analysts turned overwhelmingly bullish, with a majority recommending a 'Buy' on the stock. The improved credit cost visibility, resilient profitability, and attractive valuations were commonly cited reasons for the optimistic outlook.

Citi upgraded its rating on Axis Bank to 'Buy' from 'Neutral' and raised its target price to ₹1,463. The firm highlighted the core earnings beat and a stable Return on Assets (RoA) of around 1.5%. CLSA and Bernstein maintained their 'Outperform' ratings with target prices of ₹1,500 and ₹1,480, respectively, both pointing to the impressive asset quality as a key positive.

Management Outlook and Future Trajectory

Axis Bank's management, led by CEO and MD Amitabh Chaudhry, reiterated its ambition to grow faster than the overall banking system in a sustainable manner. The bank's focus on granular retail loans and strong growth in the corporate and SME segments is expected to drive future performance. Nomura projects the bank's earnings to grow at a Compound Annual Growth Rate (CAGR) of 26% over FY27-28, with RoA expected to be in the range of 1.7-1.8%.

Conclusion

Axis Bank's third-quarter results for FY26 have successfully demonstrated its resilience and operational strength. The bank's ability to deliver a profit beat, driven by steady core income and a significant improvement in asset quality, has reinforced investor confidence. The subsequent stock rally and the unanimous bullish stance from brokerages suggest a positive outlook for the lender. As the bank continues to execute its strategy, its performance will be closely watched against the backdrop of the broader economic environment and regulatory landscape.