Bank of Baroda shares extend slide for 3rd straight day: Should you buy, sell, or hold?

Nomura has downgraded Bank of Baroda from a "buy" rating to "neutral"

Shares of Bank of Baroda continued to fall for the third straight day, dropping over 2 percent to Rs 219 per share on May 8 after several brokerages downgraded the stock following a weak March quarter (Q4FY25) performance.

In the last three trading sessions, the stock of this public sector lender has declined by over 11 percent, compared to a 0.5 percent fall in the benchmark Nifty 50 index.

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Nomura has downgraded Bank of Baroda from a "buy" rating to "neutral" and reduced its target price to Rs 235 from the earlier Rs 265.

According to Nomura, Bank of Baroda posted a weak set of numbers for the March quarter, and its guidance for Net Interest Margins (NIMs) going forward is not very encouraging.

The bank expects its margins in financial year 2026 to be similar to what it reported in financial year 2025. However, margins are likely to remain under pressure due to expectations of more rate cuts by the Reserve Bank of India (RBI), which has already reduced rates by 50 basis points.

As a result, Nomura has lowered its margin forecast for Bank of Baroda by 18 basis points for financial year 2026 and by 14 basis points for financial year 2027. It has also reduced its Earnings per Share (EPS) estimate for the same years by 8 percent and 10 percent respectively, mainly due to lower expectations for Net Interest Income (NII).

Equirus Securities has also lowered its profit estimate for FY26 by 7 percent, citing weaker NIM assumptions for the bank.

The brokerage said, “We now see limited near-term upside and assign an ‘ADD’ rating to the stock. Our March 2026 target price is Rs 250, down from the earlier target of Rs 280 set for September 2025. This is based on a valuation of 0.9 times FY27 Adjusted Book Value (ABV), compared to 1.0 times earlier.”

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