Axis Bank Shares Rally Despite Q2 Profit Hitting Nine-Quarter Low: What’s Driving the Rally?

Shares of Axis Bank Ltd. have surged in early trade, reaching an intraday high of Rs 1,216 after the lender reported its September quarter earnings for the financial year ending March 2026, on Wednesday. The stock is currently trading at Rs 1,198, which accounts for a gain of more than 2.5%. This compares to Wednesday’s closing price of Rs 1,169.

Q2 Earnings: A Mixed Bag

Axis Bank reported its September quarter earnings after market close on Wednesday, with net profit seeing a 24% decline at Rs 5,090 crore – a nine-quarter low. Profit numbers missed the estimate of Rs 5,838 crore, as projected by the analysts tracked by Bloomberg.

However, the impact on net profit was largely on account of a one-time standard asset provisioning of Rs 1,230 crore. Provisions and contingencies of the bank surged sharply by 61% to Rs 3,547 crore in the July-September period, compared to Rs 2,204.09 crore in the corresponding period of the last fiscal.

Brokerages React: A Positive Quarter for Axis Bank

Brokerages reacting to Axis Bank’s second-quarter earnings have largely deemed it a positive quarter for the bank. Firms such as CLSA, Bernstein, and HSBC have pointed out the lender’s improving asset quality, strong loan growth, and margins.

Brokerages largely believe it was a strong quarter for Axis Bank, as far as operational metrics are concerned. The only real negative was the one-time standard asset provisioning, which, in turn, impacted the lender’s profitability for the quarter.

Technical Analysis: What’s Driving the Rally?

The shares of Axis Bank are trading with a relative strength index of 59, which indicates neutral market sentiment. However, the stock’s surge despite a decline in net profit suggests that investors are looking beyond the one-time provisioning and focusing on the bank’s improving asset quality and strong loan growth.

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Analyst Price Targets: Upside Potential of 11.5%

Forty-one out of the 51 analysts tracking Axis Bank have a ‘buy’ rating on the stock, ten recommend a ‘hold’. There are no sell ratings on the counter, according to Bloomberg data. The average of 12-month analyst price targets is Rs 1,356, which implies a potential upside of 11.5%.

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Conclusion: What’s Next for Axis Bank?

In conclusion, while Axis Bank’s Q2 earnings may have missed estimates due to a one-time provisioning, the bank’s improving asset quality, strong loan growth, and margins are driving the rally in its shares. With a potential upside of 11.5% based on analyst price targets, investors may want to consider adding Axis Bank to their portfolio.

However, as with any investment decision, it’s essential to do your own research and consider your individual financial goals and risk tolerance. To learn more about investing in the Indian stock market and how to get started, check out our comprehensive guide.