Bank Of Baroda Q4 Result Review: Shares Gain On Profit Beat, Analysts Bet On Growth

Bank of Baroda is well positioned to continue its growth trajectory after its fourth-quarter profit beat analysts' estimates, according to brokerages. Some of the analysts have also raised their target price for the stock.

The state-run bank's net profit rose 168% year-on-year to Rs 4,775 crore in the quarter ended March, according to an exchange filing. Analysts polled by Bloomberg estimated a net profit of Rs 4,034 crore for the fourth quarter of FY23. The lender's strong profit growth was driven by higher interest income, sharply lower provisions, and an improved net interest margin.

The bank's domestic gross advances for the January-March quarter grew by 16.3% to Rs 7.95 lakh crore, up from Rs 6.84 lakh crore a year earlier. Bank of Baroda's domestic deposits, on the other hand, registered a growth of 13% year-on-year and stood at Rs 10.47 lakh crore as of Q4 FY23.

Overall, brokerages have expressed confidence in the performance delivered by Bank of Baroda in the January-March quarter, with both Motilal Oswal and Emkay Global raising their target price for the stock following the results.

Shares of Bank of Baroda rose 1.42% to Rs 189.15 apiece as of 9:20 a.m., compared with a 0.07% decline in the benchmark Nifty 50.

Of 36 analysts tracking the stock, 31 maintain a 'buy' and five suggest a 'hold', according to Bloomberg. The return potential implies an upside of 14.4% over the next 12 months.

• Strong loan growth and an expansion in margins drove Bank of Baroda's core income higher.

• Non-interest income rose mainly due to a strong recovery from written-off accounts.

• Higher-than-expected stress from a restructured book could be a downside risk.

• Maintain 'overweight' with a price target of Rs 220 per share.

• Credit growth for Bank of Baroda is expected to moderate to 13–14%, but strong margins are likely to stay.

• The bank's healthy capital position also provides comfort as compared to its peers.

• Bank of Baroda also plans to unlock value in its insurance subsidiary.

• Maintain 'buy' and raise the target price from Rs 220 apiece to Rs 230 apiece.

• Bank of Baroda's metrics are moving closer to those of top-tier banks.

• The bank's valuation remains attractive despite a strong performance.

• Believe that the bank's interest margin and loan growth could be under pressure, but low credit costs will support return-on-equity.

• Earnings estimates have room for upgrades if margin pressure doesn't materialise.

• Bank of Baroda is likely to trade at a discount relative to the State Bank of India in this cycle.

• Maintain 'buy' and raise the target price from Rs 185 per share to Rs 200 per share.

• Bank of Baroda expects retail loan growth to be 1.5 times that of overall loan growth.

• The bank's business growth was healthy in Q4 FY23, and its current account and savings account mix also improved.

• Bank of Baroda's management has guided for a credit cost of approximately 1% under the normal cycle.

• Maintain 'buy' with a target price of Rs 240 per share.