Buy Bank of Baroda; target of Rs 345: Anand Rathi

Anand Rathi's research report on Bank of Baroda

Bank of Baroda reported a healthy performance in Q2 FY26, led by improved operating performance and pick-up in credit growth. Key positives are: (1) strong business growth (both loans and deposits rose 4.5%+ q/q), (2) net slippages at 37bps, (3) stable core operating performance (up 8% q/q), and (4) 1%+ RoA for 13th straight quarter. We expect H2 FY26 to be strong as well, led by better business growth, pick up in margin and stable asset quality. Ahead, we expect the bank to maintain ~1% RoA in the medium-term. We maintain a BUY rating, with a TP of Rs345, valuing the stock at 1x P/ABV on FY28e book.

Outlook

Our Rs345 TP, which stems from the two-stage DDM model, implies a ~1x P/ABV multiple on its FY28e book. Risks: Lumpy slippages in corporate book and lower-than-estimated credit growth.