Axis Bank retail and wholesale execution supports FY27-28E earnings growth

Investment View and Valuation

Kotak Securities maintained its BUY recommendation on Axis Bank following its August 28, 2026 company update. The report is based on a meeting with Munish Sharda, Executive Director, and Vijay Mulbagal, Group Head of Wholesale Bank, to understand the bank’s retail and wholesale banking operations.

Dual-Engine Growth Opportunity

Kotak Securities’ central thesis is that Axis Bank has a dual-engine growth opportunity across retail and wholesale banking. In retail banking, the bank expects to initially close its growth gap with the industry and subsequently deliver market-share-accretive growth.

The broker expects stronger execution, materially improved asset quality and improved retail profitability to support this trajectory. The report attributes the improvement in asset quality to investments in credit models, monitoring and collections.

Retail Banking Outlook

Retail profitability is expected to improve through recent technology investments, a favourable loan mix, better pricing and lower credit costs. Kotak Securities believes these factors should improve Axis Bank’s earnings resilience and support healthy earnings growth in FY27-28E.

The broker specifically identifies operating leverage and lower credit costs as potential supports for earnings and as a cushion against downside risks.

Wholesale Banking Strategy

Axis Bank remains focused on capital-efficient and relationship-led growth in wholesale banking rather than stretching its balance sheet. The strategy is intended to leverage fee income, cross-selling opportunities and technology-led franchise expansion.

Kotak Securities highlights strong client engagement, faster underwriting turnaround times and technology investments, including the Neo platform, as factors helping Axis Bank gain share in the wholesale segment.

Key Negative and Report Limitations

The key negative identified in the report is that wholesale deposit costs have not eased meaningfully, despite such costs typically easing in the first quarter. This could remain a constraint on the expected improvement in profitability.

The available report summary does not provide quarterly financial results, detailed earnings estimates, a valuation methodology or a separate target-price calculation. The stated fair value remains unchanged at Rs1,600.