Axis Bank Shares Plunge Over 4% Amid Delayed NIM Recovery Outlook; Bank Nifty Slips to 59,000 Mark

Shares of

tumbled more than 4% in early trading on Tuesday, erasing recent gains and weighing heavily on the Bank Nifty index, after a research note from Citi highlighted a prolonged timeline for the lender's net interest margin (NIM) stabilization. The stock, a key constituent of the banking sector, shed as much as 4.2% to hit an intraday low of Rs 1,231 per share, down from Monday's close of Rs 1,284.8. This sharp decline came on the heels of Citi Research's reaffirmation of its 'Neutral' rating on the stock, with a modest target price of Rs 1,285 – signaling limited upside potential of just 0.02% from the prior close. Management Flags Extended NIM Squeeze into 2026 In its latest analysis, Citi Research pointed to insights from Axis Bank's management, which now anticipates a more protracted path to NIM recovery. The brokerage noted that the bank expects its NIMs – a critical profitability metric – to reach a trough in either the fourth quarter of fiscal year 2026 (January-March 2026) or the first quarter of FY27 (April-June 2026). This is a notable shift from earlier expectations of stabilization during the current Q3 FY26 (October-December 2025). "Management now forecasts a shallow, 'C'-shaped NIM trajectory towards a targeted 3.8% over the next 15-18 months," Citi stated in the report. The firm attributed this delay to ongoing pressures, including the optimization of the bank's fee-to-asset ratio, which remains hampered by market dynamics. Despite the headwinds, Citi highlighted some positive undercurrents in Axis Bank's lending portfolio. Corporate lending is gaining momentum, while the retail segment shows signs of rebounding, driven by pent-up consumer demand – though its longevity warrants close observation. Stress in credit cards is abating, personal loans are steadying, and export-focused micro, small, and medium enterprises (MSMEs) exhibit resilience with no immediate red flags.