Source: Good Returns
New Delhi, Shares of state-owned lender Bank of Baroda (BoB) will be in the limelight after it reported a slight uptick in net profit for the April-June quarter of the FY26 fiscal year (Q1 FY26).
The bank’s net profit increased by 2% year-on-year (YoY) to ₹4,541 crore, from ₹4,458 crore in same quarter last year
Although the bank’s Net Interest Income (NII), which is the income received from loans minus interest paid on deposits fell to ₹11,435 crore, decreasing by 1.4% YoY. The bank also said that the decline was due to reclassification of interest received on income tax refunds.
The bank saw a steady growth in both deposits and loans. Bank of Baroda results for the quarter ended December 31, 2022 were as follows:
- Total deposits increased 9% YoY to ₹14.35 lakh crore.
- Domestic deposits grew 8% to ₹12.04 lakh crore.
- International deposits increased 15% to ₹2.31 lakh crore.
- Retail loans increased 17% YoY to ₹2.61 lakh crore.
- Total advances were up 14% to ₹12.15 lakh crore.
- Domestic gross advances increased 12% to ₹9.91 lakh crore.
Asset Quality Improved
The bank also demonstrated improved loan book quality:
Net NPA dropped to 0.60%, improving by 9 basis points.
What Are Brokerages Saying?
There are conflicting views on the stock.
Motilal Oswal (MOSL): Neutral
Brokerage maintained a ‘Neutral’ rating but increased the target price from ₹250 to ₹260.
They mentioned that the bank is supported by strong other income, and it targets an overall recovery of ₹10,000 crore in FY26.
The bank also aims to open 300 additional branches, has made 40% provisions on stressed accounts and is expected to deliver a Return on Assets (RoA) of 1.14% and Return on Equity (RoE) of 16.2% in FY27.
Antique Broking: Buy
Antique assigned a ‘Buy’ rating with a higher target price of ₹290.
According to the brokerage, Bank of Baroda’s (BoB) profit was aided by treasury operations, although the loan book fell slightly.
The brokerage noticed that the bank has maintained RoA above 1% for 12 consecutive quarters, indicating consistency in its performance.
Antique also upgraded its profit estimates for FY26 by 3% and FY27 by 6%.
Final Thoughts
Bank of Baroda demonstrated stability in Q1 FY26, with minor profit growth, good asset quality, and steady growth in loans and deposits. Though the margins are under pressure, the Bank is taking steps to recover bad loans and expand its business.
Analysts suggest target prices between ₹260 and ₹290, indicating modest upside. Investors may want to consider their appetite for risk before choosing to buy, hold, or wait.
