Bank of Baroda shares rise on strong Q3 as brokerages bullish. Check target price

“Strong overall performance is due to improving core PPOP and receding stress. We expect sustained performance on core to drive rerating. We expect a ROE of ~14% by FY25E. Factoring in better NIMs and higher other income, we raise FY23E EPS 12%, while FY24E/25E EPS is changed by 4%/2%,” said brokerage Elara Capital which has Accumulate rating on Bank of Baroda shares with revised target price of ₹182 (earlier ₹160) as BoB remains its preferred pick in the PSU banks space after State Bank of India (SBI). Macroeconomic risk, impending management transition and clarity on one corporate group exposure are key, it added.

“Management reassured that its profitability ratios would continue to remain healthy. We upgrade our earnings estimate 8%/ 9% for FY23/ FY24E and maintain for FY25E and we think our credit cost estimates of ~1% for FY24/25 (vs. 64 bps for 9MFY23) may have buffers. We expect RoA of ~1% and RoE of ~16% and maintain BUY with a revised target price of ₹205 vs. ₹180 earlier,” said Antique Stock Broking.

Bank of Baroda (BoB) continues to report strong earnings growth on the back of margin expansion, higher treasury income and improving asset quality matrix. Balance sheet expansion was robust, with credit growth coming in at 13 quarters’ high while deposit growth too continued the momentum, said analysts at Nirmal Bang.

“The management expects overall credit growth to be ~14-16% for FY23. The bank continues to focus on margin enhancement and the management indicated that overall NIM is likely to sustain around current levels going forward. Further, it indicated that there are no concerns on the bank’s exposure to the Adani Group and the same is well within the regulatory framework. The management expects ROA for FY23 to be ~1%. Also, the management indicated that the bank would not have to raise any fresh equity capital as internal accruals are expected to be sufficient for driving growth in the near term. We maintain BUY on with TP of ₹225,” they added.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.