Bank of Baroda investors have much to cheer about as the public-sector bank will now feature in the MSCI Emerging Markets Index. At 10:16 am on February 28 the stock was quoting Rs 159.75, up 0.47 percent or Rs 0.75 on the BSE. Intraday, the stock touched a high of Rs 160.55, and low of Rs 157.60.
Bank of Baroda's share price had settled at Rs 169.45 on February 10 after touching an intra-day high of Rs 173.70. On February 9, MSCI, a leading provider of critical decision support tools and services for the global investment community, announced the results of the February 2023 Index Review for the MSCI Equity Indexes. The indices in its fold include small cap, micro cap, global value & growth and many other sub-indices.
The addition of Bank of Baroda to the MSCI index was a consequence of its Quarterly Comprehensive Index Review (QCIR). CG Power and Industrial and Shriram Finance investors also had reason to celebrate — the two scrips are being added to the MSCI India Domestic Index.
However, in the index rebalancing, Biocon has lost its position in the India Domestic Index.
The changes will take effect from March 1, 2023.
Brokerages see big things ahead for BoB
Domestic brokerage and equity research houses have been highlighting the addition of Bank of Baroda as a major positive development, which is likely to open the floodgates for elevated FIIs inflows.
Emkay Global believes the bank could witness an inflow of $137 million. According to the research and investment fund, the bank could have a weight of 0.40 percent on the index.
“The stock has seen a long build-up in the last 2 weeks as the price has gained 7 percent with OI increasing by 25 percent and Futures basis at the highest level in 12 months. Thus, inclusion in MSCI could provide further bullish momentum to the stock.” Emkay Global said in a research note.
Nuvama Wealth, on the other hand, expects the stock to see inflows of $145 million.
Quarterly performance
Bank of Baroda managed to impress investors while simultaneously beating analysts’ estimates with its results for the quarter ended December. The bank reported its highest-ever quarterly net profit of Rs 3,853 crore for Q3FY23, which was a 75.4 percent jump YoY. Operating income for Q3FY23 stood at Rs 14,370 crore, registering a robust increase of 29.8 percent YoY.
There was great news on other fronts as well.
The bank’s NIM expanded 24 basis points to 3.37 percent from 3.13 percent in Q3FY22; the net NPA ratio of the bank improved to 0.99 percent in Q3FY23 as compared with 2.25 percent in Q3FY22 while the yield on advances increased to 7.78 percent in Q3FY23 as against 6.92 percent in Q3FY22.
The Cost to Income ratio also registered dramatic improvement, declining to 42.71 percent for Q3FY23 as against 50.47 percent for Q3FY22.
FIIs grab a larger slice
Not surprisingly, FIIs have been hiking their holding in the bank. By the end of December 2022, the FII holding in BoB stood at 10 percent, having risen by a stellar 260 bps from December 2021.
DIIs have also been making a beeline for the bank. Their stake in the bank rose to 18 percent in December 2022 from 14.7 percent in December 2021.
Seen on a quarterly basis, FII/FPI holdings inched upwards from 8.93 percent to 9.97 percent in the December 2022 quarter. The total number of these investors stood at 476 by the end of the quarter compared to 376 at the end of the quarter ended September.
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