Bank of Baroda Q3 Results Review: Dolat Capital Maintains 'Buy' On The Stock, Revises Target Price— Here's Why

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Dolat Capital Report

Bank of Baroda reported weaker than expected net interest income growth at 3% YoY, with 15 bps sequential decline in net interest margin to 2.94%. PAT, however, benefitted from low credit costs (40 bps), with robust RoA at 1.15%. Loan growth at 3% QoQ was broad-based across RAM (4-5% QoQ each), with a flattish corporate book, while retail TD growth was subdued (flattish).

Net interest margin in Q2 FY25 benefitted from full recovery of a WO account (10bps impact), which was missing in Q3 FY25. Bank of Baroda lowered NIM guidance by 10 bps to 3.05% (plus/minus 5 bps) for FY25E. Credit cost at 55 bps for 9M has trended better than expectations.

We factor in lower NIM, offset by improved credit costs. Maintain ‘Buy’ rating with revised target price of Rs 285, valuing the bank at 1.1x Sep26E P/ABV against RoA/RoE of 1%/15%. Trading at 0.8x Sep-26 P/ABV, valuations are undemanding.

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