Is Axis Bank Stock A Good Investment?

Is Axis Bank Stock A Good Investment – Axis Bank is one of the leading private sector banks in India. It offers a wide range of financial services including retail banking, corporate banking, investment banking and other services. The bank has over 4,500 branches across the country and serves over 200 million customers. Axis Bank stock has given decent returns to investors over the long term. But is it a good investment opportunity currently? Let’s analyze in detail.

Axis Bank Stock

Strong Financial Performance

Axis Bank has posted a healthy financial performance over the past 5 years:

  • Net interest income has grown at 12% CAGR from FY17-22 to reach Rs. 27,853 crores.
  • Operating profit has risen at 15% CAGR to Rs. 18,878 crores in FY22.
  • Net profit has grown at 16% CAGR to Rs. 11,969 crores during the period.
  • Return on assets has averaged around 1.2% while return on equity has been 15% on average.

The consistent growth in profits, margins expansion and strong return ratios indicate the bank’s strong fundamentals.

Leadership in Digital Banking

Axis Bank has emerged as a leader in digital banking in India by leveraging technology across services. Some key achievements:

  • Its mobile banking app Axis Mobile is highly popular with 50 million downloads.
  • Over 75% of its transactions now happen digitally vs. industry average of 60%.
  • It launched innovative maxi savings account, digital NRI account, WhatsApp banking and voice banking services.
  • The bank won several awards for its digital transformation initiatives.

The strong digital footprint provides competitive edge to Axis Bank and helps attract millennial customers.

Strong Asset Quality

Axis Bank’s asset quality is much better than PSU bank peers and in line with leading private banks like HDFC and ICICI.

  • Gross NPA ratio has steadily declined from 5.96% in FY18 to 2.82% in FY22.
  • Net NPA ratio has reduced from 2.56% to 0.64% during the same period.
  • Provision coverage ratio has improved to 70% in FY22.

The improving asset quality indicates the bank’s robust credit evaluation and risk management practices.

Diversified Loan Book

Axis bank has a well diversified loan mix across retail, corporate SME and agri sectors:

  • Retail loans comprise 51% of the overall loan book providing stability.
  • Corporate loans account for 40% of the book – these are well spread across companies and sectors.
  • SME and agri loans together form 9% of the overall advances.

The diversified loan portfolio helps manage risk prudently and maintain growth momentum across business cycles.

Comfortable Capital Adequacy

Axis Bank is well capitalized with a strong capital adequacy ratio (CAR) of 18.55% as of June 2022 well above the regulatory minimum of 10.875%.

Its tier I CAR stands at 17.47% giving good headroom for business growth and asset expansion.

The comfortable capital levels provide cushion against any unforeseen losses or stress in the future.

Valuation and Shareholder Returns

  • Axis Bank trades at reasonable valuations with a 1-year forward P/E of 14x.
  • The bank offers an attractive dividend yield of 2%.
  • It has grown its book value per share at 13% CAGR over the last 5 years.

Axis Bank offers a good blend of moderate valuations, steady dividend payouts and consistent growth in shareholder value.

Growth Visibility

Axis bank is poised for strong growth ahead led by:

  • Expanding its branch network in underpenetrated regions
  • New product launches especially in digital banking and payments
  • Cross-selling across its large customer base
  • Higher retail and SME lending
  • Improvement in corporate credit growth cycle

It aims to grow its loan book at a healthy 15-18% CAGR over the next few years. The growth visibility creates value for long term investors.

Industry Tailwinds

Axis Bank stands to benefit from the following positive industry dynamics:

  • Increasing financial savings and bank deposit growth
  • Low banking penetration offering room for growth
  • Rising digital transactions and payments
  • Government push for higher banking formalization
  • Potential value unlocking from subsidiaries

The strong industry tailwinds coupled with its competitive strength makes Axis Bank well positioned looking ahead.


While Axis Bank’s long term outlook appears promising, some concerns exist:

  • Slower than expected recovery in corporate loan growth
  • Continued priority sector lending requirements
  • Evolution of fintech competition
  • High management turnover earlier

However, its strong track record, performance culture and franchise indicate it is well placed to tide over challenges.

Overall, Axis Bank remains a fundamentally strong franchise to play India’s long term banking sector growth story. The company is poised for healthy earnings expansion led by margin improvement, lower credit costs, higher retail lending and revival in corporate credit cycle. While valuations appear slightly elevated currently, long term investors could accumulate the stock on dips for an investment horizon of 3-5 years.

Is Axis Bank Stock A Good Investment? – FAQs

What is the 1-year return on Axis Bank share?

Axis Bank share price has gained around 45% in last 1 year, outperforming broader indices.

What is the market cap of Axis Bank?

Axis Bank’s market capitalization is approximately Rs. 2.8 lakh crores making it among the top 7 listed banks in India.

Who are the major shareholders of Axis Bank?

As of Sep 2022, promoters hold 8.9% stake in Axis Bank. Foreign institutional investors own over 50% stake while domestic financial institutions hold 15-20% stake.

What is the management commentary on growth outlook?

The bank aims to grow consolidated loan book by 15-18% by focussing on retail sector and working capital demand from companies. It expects further improvement in asset quality metrics as well.

What are analysts’ recommendations on Axis Bank stock?

Most analysts are upbeat on Axis Bank with buy/outperform ratings owing to its strong liability franchise, stable asset quality and healthy balance sheet. The 12-month consensus target price indicates nearly 20% upside.

How does Axis Bank compare with peers like HDFC Bank?

Axis Bank is similar to HDFC Bank in terms of financial metrics like profitability, asset quality and capital adequacy. It lags somewhat in valuation multiples, deposit profile and rural/semi-urban reach which provides room for further growth.

Does Axis Bank pay dividend? What is the dividend policy?

Axis Bank pays dividend in the range of 20-50% of profit after tax. For FY22 it announced a dividend of Rs. 2.50 per share (face value Rs. 2). The dividend payout ratio was 49% for FY22.

What are the key risks to watch out for Axis Bank?

Key risks are delayed corporate capex recovery, higher loan delinquencies especially in the retail segment, margin pressure due to competition and subdued non-interest income growth. However the bank seems well placed to mitigate these risks.


In summary, Axis Bank remains one of the best plays in the Indian banking space. It has delivered consistent growth and exhibited resilience across business cycles. With its strong retail franchise, leadership in digital banking, stable asset quality and robust capital position, the bank is poised for healthy growth ahead. While valuations remain elevated, long term investors can accumulate the stock on dips. Axis Bank remains a core portfolio holding as a play on the India growth story.

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