Bank of Baroda profit jumps 88% YoY; what brokerages are saying

Shares of Bank of Baroda jumped nearly 1 percent in trade on August 7, post solid Q1 results by the public sector bank. At 1:17 pm the Bank of Baroda stock was trading 0.026 percent lower at Rs 191.55 on NSE.

The public sector lender registered a massive 87.7 percent year-on-year growth in profit at Rs 4,070.1 crore for quarter ended June FY24 despite higher provisions, supported by healthy operating income growth of 42.9 percent YoY.

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Net interest income during the quarter increased by 24 percent to Rs 10,997 crore compared to year-ago period, with 25 bps YoY increase in net interest margin at 3.27 percent for Q1FY24, while global advances grew by 18 percent and deposits increased by 16.2 percent. Asset quality improved with the gross NPA declining 28 bps sequentially to 3.51 percent and net NPA down 11 bps QoQ to 0.78 percent for the quarter.

Brokerage Views

Motilal Oswal has given a ‘buy’ rating to the Bank of Baroda (BoB) stock with a target price of Rs 240 signifying a potential upside of 26 percent from the current market price of 190 in a research report dated August 7, 2023.

Nuvama Institutional Equities has given a 12-month price target of Rs 220 per share for Bank of Baroda with a ‘buy’ rating in a report dated August 6, 2023. The brokerage firm further stated that, “BoB’s NII missed consensus by 6 percent with a sharper-than-expected NIM decline of 26bp QoQ. Adjusted for recoveries, NIM decline remained high at 18bp. While trading gains were significantly higher-than expected, these were utilised to create floating and standard provisions. As such, profit after tax (PAT) missed consensus marginally by 1 percent.”

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B&K Securities have given a ‘hold’ rating to the Bank of Baroda stock with a target price of Rs 200. The brokerage firm further stated in its outlook for the bank that, “BOB’s senior management team sounds confident of expanding the bank’s credit portfolio (particularly retail credit book) ahead of the banking system’s credit growth with a relatively stable margin. We expect the bank’s margin to remain soft in 2QFY24 and improve in 2HFY24 with term deposit re-pricing cycle gradually getting over.”

Brokerage firm Prabhudas Lilladher has given a ‘buy’ rating to the BoB stock with a target price of Rs 235 stating that, “Miss of 3% on core PAT driven by lower NIM and higher tax rate. Balance sheet stronger; loan growth for FY24E guided at 14-15%.”

Stock Performance

Bank of Baroda stock has given a return of 12.13 percent over the last six months. The stock has thus outperformed the benchmark Nifty Bank index which has given a return of 8.44 percent over the same duration.

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