Bank of Baroda share price gained over 2% in early trade on Monday after brokerages maintained their positive view on the PSU lender post its Q4 results. Bank of Baroda shares recovered from the drop of over 2% on Friday after the announcement of its Q4 earnings.
The state-run lender Bank of Baroda reported an overall steady quarter with its net profit and net interest income (NII) both rising 2.3% year-on-year (YoY). Global Net Interest Margin (NIM) improved by 17 basis points (bps) sequentially to 3.27% in Q4FY24.
The bank’s provisions were high as it provided for its aviation exposure. Loan growth was healthy at 15% YoY and the bank expects loan growth of 12-14% in FY25. Deposit growth was also strong, while the CASA mix improved. Slippage rose sharply from 1.1% to 1.3% QoQ driven by higher MSME and agri slippages.
Read here: Bank of Baroda Q4 results: Net profit rises 2.3% YoY to ₹4,886.5 crore; declares dividend of ₹7.6 per share
Analysts have maintained their positive view on Bank of Baroda after its Q4 results were largely in-line with estimates. Here’s what brokerages have to say on Bank of Baroda Q4 results and Bank of Baroda share price:
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Motilal Oswal Financial Services
Motilal Oswal raised its FY25 and FY26 earnings per share (EPS) estimates by 1.9% and 2.8% to account for stable margin and contained provisions. It estimates FY26 RoA and RoE of 1.22% and 17.3%.
The brokerage reiterated its ‘Buy’ rating on the stock with a target price of ₹300 per share.
Nuvama Institutional Equities
Nuvama Equities noted that there was an unexpected rise in staff cost, whereas the Street expected some decline as the wage hike was settled at 17% versus BoB’s assumption of 18%. It tweaked its earnings estimates and retained a ‘Hold’ rating with Bank of Baroda share price target of ₹255 apiece.
While Bank of Baroda is trading at a discount to SBI, we believe the discount is justified given SBI’s lower LDR, better asset quality and lower earnings volatility versus BoB. BoB’s LDR remains the highest among state banks. Prefer SBI to BoB, Nuvama said.
Also Read: Tata Motors share price tanks 6% after Q4 results 2024. Opportunity to buy?
Antique Stock Broking
Favorable credit cycle has helped Bank of Baroda improve ROA and we expect it to stay around 1.1% and RoE to be 17% over FY25 and FY26. However, given the valuation of 1.1x and 1.0x FY25/ 26E, we believe asset quality gains are factored in and for a stronger re-rating core performance needs to improve which would test growth and NIM dynamics, Antique Stock Broking said.
The brokerage kept its earnings estimate for FY25 and FY26 unchanged and expects Bank of Baroda to report a RoA of 1.1% and RoE of 17% over FY25 and FY26.
It maintained a ‘Buy’ call on the Bank of Baroda shares with an unchanged target price of ₹290.
At 9:30 am, Bank of Baroda shares were trading 0.80% higher at ₹257.70 apiece on the BSE.
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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 13 May 2024, 09:31 AM IST
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