Bank of Baroda share price: The October-December quarter (Q3) of the current financial year (FY25) turned out to be a mixed bag for Bank of Baroda. The public sector bank (PSB) reported a beat on net profit, which rose 5.6 per cent year-on-year (Y-o-Y) to Rs 4,837 crore. It, however, missed Street's estimate on net interest income (NII), which was up 2.8 per cent Y-o-Y to Rs 11,417 crore during the quarter.
That apart, the lender's non-interest income (including fees, commissions, treasury revenues, and recoveries) and credit cost, too, beat expectations, aiding the bottomline in Q3FY25. The former was up 34.1 per cent year-on-year (Y-o-Y) at Rs 3,769 crore and the latter stood at 38bps versus 86bps quarter-on-quarter (Q-o-Q).
Unadjusted net interest margin (NIM) declined 16bps Q-o-Q to 2.94 per cent while core NIM, adjusted for the lumpy recovery income of Rs 350 crore in Q2FY25, decreased 6bps Q-o-Q.
The management's NIM guidance has been revised down by 5bps to 3.05 per cent, with an adjustment cushion of +/- 5bps.
Going ahead, analysts remain divided on the earnings trajectory as they believe the growth trajectory of loans and deposits, and the subsequent improvement in the loan-deposit ratio (LDR), coupled with NIM performance will decide the earnings outlook.
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On the bourses, Bank of Baroda share price today declined 5.1 per cent on the BSE to hit an intraday low of Rs 211.1 per share. It ended 4 per cent lower at Rs 213.4 per share as against 0.97 per cent surge in the benchmark BSE Sensex index.
Here's how leading brokerages infer Bank of Baroda Q3 results:
Nuvama Institutional Equities
The brokerage has retained its 'Buy' rating on BoB stock given the cheap valuation of 0.8-times book value (BV) FY26E. It, however, has cut target price to Rs 265 from Rs 277. ALSO READ: Tata Consumer share up 5% despite muted Q3; tea inflation worries analysts
It noted that Q3 loans grew 3 per cent Q-o-Q and 12 per cent Y-o-Y, while deposits were up 2 per cent Q-o-Q and 12 per cent Y-o-Y. Domestic deposit growth, however, was subdued at 1 per cent Q-o-Q and 9 per cent Y-o-Y while overseas deposits grew 7 per cent Q-o-Q.
The guidance for credit and deposit growth, the management said, remains unchanged at 9–11 per cent and 11–13 per cent Y-o-Y, respectively, for FY25E.
Overall, Nuvama has cut NII estimates by 3.1 per cent for FY25 and 4.9 per cent for FY26. PAT estimate, on the contrary, stands revised upwards by 0.8 per cent for FY25 and 4.1 per cent FY26.
Emkay Global Financial Services
This brokerage, too, maintained its 'Buy' rating on the stock with a cut in target price to Rs 300.
It noted that slippages declined 6 per cent Q-o-Q to 1.1 per cent (Rs 2,900 crore) of lagged loans. Gross non-performing assets (GNPA) dipped 0.3 per cent Q-o-Q with GNPA ratio at 2.43 per cent (down 7bps Q-o-Q). NNPA ratio, meanwhile, inched down 1bps Q-o-Q to 0.59 per cent.
It, however, has cut FY25-27E earnings by 1-6 per cent, mainly due to a slower growth/margin trajectory, and expects the bank to report return on asset (RoA) of around 1-1.2 per cent. ALSO READ: Kalyan Jewellers shares up 8%, hovers near upper circuit on posting Q3 nos
Motilal Oswal Financial Services
The brokerage has downgraded the stock to 'Neutral' with a lower target price of Rs 250 as the bank has lowered its NIM guidance by 5bps amid pressure on yields, while the costs remain elevated.
The brokerage has tweaked its FY25/FY26 earnings per share (EPS) estimates by +2.8 per cent/-1.3 per cent and expects FY26E RoA/return on equity (RoE) at 1.05 per cent/15 per cent.
It remains watchful on business growth owing to a high LDR (82.7 per cent) and increasing reliance on bulk deposits. It expects margins to remain under check, as deposit competition is likely to remain elevated.
JM Financial Services
Amidst the prevailing tight liquidity conditions and elevated credit costs, the brokerage believes the bank's ability to effectively manage slippages while driving growth will be a crucial factor to monitor. While there is limited room for margin expansion and recoveries from previously written-off accounts have largely plateaued, it opines the current valuations at 0.7x FY27E BVPS remain attractive, offering compelling value despite the headwinds.
It expects RoA/ROE of ~1 per cent/13.8 per cent by FY27E. It maintains 'Buy' with a lower target price of Rs 270.