 "Trading tips: What should you do with Bank of Baroda stock after Q1 result?")
Bank of Baroda share price: Bank of Baroda share price today were range-bound on the BSE and NSE. The stock of Bank of Baroda was trading 0.16 per cent lower at 10:50 AM at Rs 253.45 per share on Thursday.
Bank of Baroda share price hit an intraday high of Rs 258 and an intraday low of Rs 251.4, thus swinging in a price band of Rs 7.
The lacklustre move comes after public lender Bank of Baroda posted soft results for the June quarter of the current financial year (Q1 FY25).
Bank of Baroda Q1 results:
On July 31, Bank of Baroda reported a standalone net profit of Rs 4,458 crore for Q1FY25, rising 9.5 per cent over the previous year profit.
It witnessed a net interest income growth of 5.5 per cent year-on-year (Y-o-Y) to Rs 11,600 crore. Bank of Baroda's net interest margin (NIM) fell by 9 basis points (bps) to 3.18 per cent Y-o-Y. NIM was flat at 3.27 per cent in Q4FY24.
On the business side, Bank of Baroda's Advances grew 8.1 per cent Y-o-Y to Rs 10.71 trillion led by retail lending portfolio (up 20.9 per cent to Rs 2.2 trillion).
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Total deposits, on the other hand, increased 8.9 per cent to Rs 13.06 trillion. The share of low-cost deposits — current account and savings account (CASA) — improved marginally to 40.62 per cent in Q1FY25 from 40.33 per cent a year ago.
What should investors do with Bank of Baroda stock? What is Bank of Baroda share price target?
Nuvama Institutional Equities | Hold | Target price: Rs 250
Bank of Baroda reported a loan-to-deposit ratio (LDR) of 80 per cent in Q1 -- highest among state-owned banks.
The CEO guided for higher loan growth of 12–14 per cent versus 9 per cent currently—a tall ask in our view. We believe as deposit growth accelerates and after discounting the sharp rise in investment yield in Q1, NIM will decline Q-o-Q, going ahead. Credit cost will rise to 75bp from 48bp to factor in the Expected Credit Loss (ECL) impact.
YES Securities | Buy | Target: Rs 360
Gross NPA additions amounted to Rs 3,018 crore for Q1 FY25, translating to an annualised slippage ratio of 1.1 per cent. The bank has maintained its guidance for a slippage ratio of 1-1.25 per cent for FY25. Recoveries and upgrades amounted to Rs 1,657 crore for Q1FY25 and the recovery from TWO was at Rs 554 crore for the quarter.
The bank expects a total recovery of Rs 10,000 crore including NPA recoveries and recoveries from written-off accounts in FY25.
Emkay Global | Buy | Target: Rs 325
Factoring in the slight moderation in growth and the slower other income, we cut our FY25-27 earnings by 6-7 per cent, but expect the bank to deliver a healthy return on asset (RoA) of 1.1-1.2 per cent during the period.
Key risks for Bank of Baroda include macro-slowdown leading to slower credit growth, margin contraction, and asset-quality disruption.
Kotak Institutional Equities | Add | Target: Rs 280
Key highlights from Bank of Baroda Q1 results were muted loan growth at 8 per cent Y-o-Y and deposit growth at 9 per cent Y-o-Y. Growth is still being led by the retail segment. Personal loans grew 40 per cent Y-o-Y, but are slowing down sharply. That apart, there was a sharp drop in non-interest income growth, led by lower treasury income. After adjustments to the investment book, there was a positive 50 bps impact on the CET-1 ratio.
"We would probably want to see BoB trading marginally higher than mid-tier peers, as the investments made by the bank in recent years to build a book closer to SBI are better than most peers. We shall keep our current rating, though the near-term discussion would be dominated by the performance of the personal loan portfolio," the brokerage said.
JM Financial | Buy | Target: Rs 280
We see limited levers for NIM expansion for the bank, and believe recoveries from previously written-off accounts have peaked out, in-line with management guidance of Rs 10,000 crore in recoveries in FY25.
At the same time, the bank was able to control growth in its opex, with both employee expenses and other expenses contracting by more than 10 per cent Q-o-Q. The wage revision impact is now in the base, and we expect employee expenses growth to be contained within 10 per cent Y-o-Y, till FY26.
We lower our growth and opex estimates, and expect the bank to deliver 1.02 per cent/14.7 per cent RoA/RoE by FY26.