At a Glance
Axis Bank has posted 72% profit CAGR over the last 5 years — a stat that would make even Adani blush. But beneath the headline-grabbing growth lies a cocktail of contingent liabilities, interest capitalization whispers, and ever-slipping promoter holding. Is this private banking beast undervalued or just cleverly dressed up?
🏦 1. Axis Bank 101: Not a New Kid on the Block
- Third-largest private sector bank in India
- Global offices: Dubai, Singapore, GIFT City (because why not?)
- 4th largest credit card issuer, but 1st in making investor eyebrows rise with contingent liabilities of ₹19.85 LAKH Cr 😮
📉 Stock Price: ₹1,213
📅 5-Year Price CAGR: 23%
💰 Market Cap: ₹3.76 lakh Cr
🎯 Book Value: ₹601
🧮 P/E: 13.4 (vs HDFC Bank’s 21.5)
🧨 Dividend Yield: 0.08% (barely counts)
📈 2. Profit Kaboom: 5-Year Financial Glow-Up
Let’s just say the numbers glow like freshly printed ₹2000 notes in 2016:
| Metric | FY20 | FY25 | Growth |
|---|---|---|---|
| Revenue | ₹63,716 Cr | ₹1,27,374 Cr | 2x |
| Net Profit | ₹1,879 Cr | ₹28,191 Cr | 15x |
| EPS | ₹6.57 | ₹90.58 | 13.8x |
| Financing Profit Margin | -16% | 6% | 👏 |
🏁 Profit CAGR (5Y): 72%
📊 Sales CAGR (5Y): 15%
⚖️ ROE: 16%
🧨 Other Income (FY25): ₹28,543 Cr (that’s 22% of total revenue)
And no, we’re not joking — the bank’s core profit is actually smaller than the “other income” it pulls in.
🤔 3. Promoters? Who?
Axis Bank is an orphan of Indian banking — no promoter, just vibes.
- Promoter holding: A majestic 8.18% — mostly held by institutions and government-backed entities.
- FII Ownership: Down from 54.7% to 43.9% in the last 5 quarters.
- DII Ownership: Zoomed from 28.8% to 40.8% — Mutual Funds and LIC ke paise ka bhav badh gaya.
- Retail Holding: A mere 6.99% — clearly desi investors prefer PSU banks or memes.
👥 No promoter drama. But also, no one to blame when things go south.
🧾 4. The Red Flags: Not All That Glitters…
Let’s talk about the less glamorous truths:
- 🚩 Contingent liabilities: ₹19.85 lakh crore 😳
(FYI: India’s GDP is ₹295 lakh Cr) - 🚩 Capitalized Interest: Screener suspects some cost dressing
- 🚩 Other Income Dependency: 22% of FY25 PBT comes from “other” — which can be volatile AF
- 🚩 Low dividend payout: Just 1% payout — cash stays with the bank
🤨 In short, the bank makes more money from non-loan stuff than actual banking.
🏁 5. Axis vs Rivals: The Clash of Banking Titans
Here’s how it stacks up against India’s private bank Big 5:
| Bank | P/E | ROE | Market Cap (Cr) | FY25 Net Profit (Cr) |
|---|---|---|---|---|
| Axis Bank | 13.4 | 16% | ₹3.76 lakh Cr | ₹28,191 |
| HDFC Bank | 21.5 | 18% | ₹15.18 lakh Cr | ₹26,492 |
| ICICI Bank | 19.9 | 18% | ₹10.17 lakh Cr | ₹29,000 (est.) |
| Kotak Bank | 22.7 | 13% | ₹4.37 lakh Cr | ₹5,000 |
| IndusInd Bank | 24.5 | 12% | ₹64,654 Cr | Loss in Q4 FY25 |
📌 Verdict: Axis Bank is trading at a discount vs HDFC & ICICI, despite similar profit levels.
💰 6. Fair Value Range (FV): What’s Axis Worth?
Let’s run some basic Edu math:
Method 1: Peer P/E Average
- Avg P/E of ICICI, HDFC, Kotak = ~21.3
- Axis EPS FY25 = ₹90.58
- FV = ₹90.58 × 21.3 = ₹1,929
Method 2: Conservative P/E of 15
- FV = ₹90.58 × 15 = ₹1,359
🎯 EduInvesting Fair Value Range: ₹1,360 – ₹1,930
(CMP ₹1,213 → ~12%–59% upside)
🧠 7. Edu Take: Axis of Profits or Illusion?
✅ Strong net profit growth
✅ Cheap P/E vs peers
✅ Solid ROE
BUT…
⚠️ Huge contingent liabilities
⚠️ Low promoter skin in the game
⚠️ Too much “other income” reliance
⚠️ Lowest dividend yield in peer group
This is not a buy-sell reco — but if you’re holding Axis, make sure your faith is in its loan book and not its treasury magic.
✍️ Written by Prashant | 📅 June 26, 2025
📌 Tags: Axis Bank, Private Banks, Nifty 50, Banking Stocks, EduInvesting Fair Value, PSU vs Private Bank, Interest Capitalization, Contingent Liabilities, Stock Valuation, FIIs Exit
