Buy Bank of Baroda; target of Rs 300: Emkay Global Financial

Emkay Global Financial is bullish on Bank of Baroda has recommended buy rating on the stock with a target price of Rs 300 in its research report dated January 30, 2025.

Broker Research

January 31, 2025 / 21:58 IST

BUY

26 Aug, 2025 12:21

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Emkay Global Financial's research report on Bank of Baroda

Bank of Baroda (BoB) reported a sharp decline in NIM (down by 16bps QoQ) to 2.94% which we believe was mainly due to recent RBI guidelines on penal interest, lower NPA recoveries, and slightly aggressive pricing in select retail loans. However, asset quality continues to perform well, as reflected in contained slippages at ~1.1% and thus lower LLP, leading to a 5% beat on PAT at Rs48bn and healthy ~1.2% RoA. Credit growth during 3Q was ~12% YoY, while the bank maintains FY25 credit growth guidance of 11-13%, which we believe could keep NIM range-bound. On the retail front, the bank believes asset quality is well within tolerable levels and would thus remain a focus area for growth along with SME and agri. We cut FY25-27E earnings by 1-6% mainly due to a slower growth/margin trajectory and expect the bank to report RoA of 1-1.2%. After the recent stock correction,

Outlook

Valuations are comforting at 0.7x Dec-26E ABV (excl subs value of Rs15/sh). We thus retain BUY, while revising our TP to Rs300 (down by 7.7%), based on 1x Dec-26E ABV (earlier 1.1x).

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