Shares of Bank of Baroda will be in focus in trade on Monday after a slew of brokerages shared a rather bullish outlook on the back of the lender's September quarter earnings that witnessed robust growth.
Several major brokerages pointed out the bank's robust asset quality and lower credit costs, leading to re-ratings and a substantial target price hike.
Although Bank of Baroda reported an 8.2% year-on-year decline in net profit to Rs 4,809 crore, its operational performance sparked optimism, with net interest income notably seeing a 2.71% uptick to Rs 11,954 crore.
More importantly, the lender's asset quality continued to improve. Gross Non-Performing Assets (NPA) fell to 2.16% from 2.28% in the previous quarter, while net NPA improved 3 bps to 0.57%. This was supported by a considerable 47% drop in provisions.
Brokerages' View On Bank Of Baroda
Investec offered a bullish outlook on Bank of Baroda, upgrading its rating from 'hold' to 'buy' while increasing the target price from Rs 250 to Rs 325.
The firm's re-rating comes on the back of Bank of Baroda's strong growth and return on assets, which were supported by low credit cost and an NII-led operating profit beat.
Similarly, Citi maintained a 'buy' rating on Bank of Baroda while hiking the target price from Rs 310 to Rs 350.
The brokerage firm described the quarter as an 'all-round beat', with net interest margins (NIMs) and lower credit cost being the two positive surprises. The NIMs were aided by an IT refund while credit costs remained low at 40 basis points.
UBS, too, hiked the target price on Bank of Baroda from Rs 280 to Rs 320 while maintaining a 'buy' rating on the counter.
UBS also highlighted Bank of Baroda's September quarter earnings as a 'strong' one, with profit beat being led by lower provisions and higher NII.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
