Shares of Bank of Baroda gained over 3.5 percent in morning trade even as the bank reported a big loss for the March quarter.
The stock touched an intraday high of Rs 146.25 and an intraday low of Rs 140.50.
The state-run lender posted a net loss of Rs 3,102.34 crore in the March quarter, missing estimates due to a jump in provisions for bad loans. In the fourth quarter last year, the net profit was Rs 155 crore.
Provisions for non-performing assets for the quarter rose by 190 percent YoY to Rs 7,052.53 crore in Q4.
NII or net interest income (difference between interest earned and paid) jumped 12 percent to Rs 4,002.26 crore from Rs 3,582 crore. NIM or net interest margin declined to 2.61 percent in Q4 from 2.97 percent in the December quarter and 2.50 percent as on March end 2017.
A Reuters poll of equity analysts had estimated a 60.8 percent fall in net profit to Rs 60.6 crore.
Overall provisions rose 154 percent YoY to Rs 6,672.38 crore.
Net NPAs increased to 5.49 percent from 4.97 percent as at December end and 4.72 percent as at the end of the fourth quarter FY17. Divergence in gross NPA was at Rs 2,918.70 crore for FY17 while that in net NPA was at Rs 2,261.20 crore.
Global brokerages observed that the bank had a soft quarter, but see profitability increasing ahead. Having said that, they have collectively reduced their target prices on the stock, with a downside of up to 14 percent.
Brokerage: CLSA | Rating: Retain buy | Target: Cut to Rs 170 from Rs 190
The global research firm observed that the bank had a bigger loss during the quarter, but the outlook was better. Going forward, it expects normalization in FY19. With non-NPL stress at 2-3 percent of loans, slippages can taper-off in FY19. Further, quality of its power book will be the key, it said. The brokerage house also sees banks continuing to gain market share from Tier-2 PSU banks. CLSA expects the bank to return to profit in this fiscal and said that recovery from NCLT cases could provide an upside.
Brokerage: Jefferies | Rating: Maintain Hold | Target: Cut to Rs 161 from Rs 178
Jefferies said that the bank had a soft quarter, but expects gradual improvement in profitability. But, it sees slippages remaining elevated in the next two quarters. Loan growth of 11.5 percent year on year was driven by retail. It expects 14-15 percent RoE only by FY20.
Brokerage: Nomura | Rating: Buy | Target: cut to Rs 190 from Rs 220
Nomura is building in 125 basis points of credit cost in FY19. It further said that credit companies should normalize in FY19.
At 09:52 hrs, Bank of Baroda was quoting at Rs 142.95, up Rs 1.75, or 1.24 percent, on the BSE.
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