Axis Bank slides about 5% as Q1 FY27 results spark analyst downgrades

On Monday morning, Axis Bank’s shares slipped roughly five percent, turning the lender into the biggest laggard on both the Nifty 50 and Sensex. The stock opened around ₹1,275, hit a low of ₹1,260.60 and was trading near ₹1,261 by 9:35 IST, with more than 5.5 million shares changing hands.

The move came after the bank released its Q1 FY27 results – the quarter that ran from April to June 2026. On the surface, the numbers look decent: consolidated net profit climbed 22.2 % year‑on‑year to ₹7,632.31 crore, while standalone profit rose 23 % to ₹7,114 crore. Net interest income (NII) also rose 8 % to ₹14,646 crore.

But the headline‑grabbers were the margins. Net interest margin (NIM) slipped to 3.46 %, down from 3.80 % a year ago and lower than the 3.73 % recorded in the previous quarter. That erosion, coupled with a 7 % drop in non‑interest income to ₹6,735 crore – mainly because trading income dived 62 % – nudged analysts to reassess their outlook.

On the asset‑side, advances grew a healthy 19 % YoY, driven by a 38 % surge in corporate loans and an 8 % rise in retail lending. Yet, the quality picture was a mixed bag: provisions fell sharply to ₹2,223 crore from ₹3,948 crore a year earlier, but the gross NPA ratio ticked up to 1.28 % from 1.23 % at March‑end.

Motilal Oswal Financial Services (MOFSL) stuck with its neutral stance, trimming the target price to ₹1,500. The bank’s management, however, emphasized the profit upside and the continued growth in its loan book, suggesting the margin squeeze could be transitory.

Investors will now watch closely how the bank navigates the margin pressure while trying to sustain loan‑book expansion. For now, the market’s reaction is a reminder that strong top‑line numbers alone don’t always win the day.