Bank of Baroda gains 4% on strong business growth; here's what brokerages have to say

The bank's global gross advances were up 19 percent at Rs 9.7 lakh crore against Rs 8.18 lakh crore and domestic advances were up 16.9 percent YoY at Rs 7.99 lakh crore from Rs 6.84 lakh.

The bank has revised its overnight and 1-year Marginal Cost of Funds Based Lending Rate (MCLR) by 5 basis points (bps) to 7.95 percent and 8.6 percent, respectively, effective April 12.

One basis point is a hundredth of a percentage point.

Here is what brokerages have to say about the stock:

According to Motilal Oswal, the bank reported robust business growth, with both advances and deposits growing at a rapid pace. Retail loans continue to drive overall loan growth, while the internal book too saw strong trends.

Within deposits, CASA deposits grew at a faster pace, resulting in an increase in the CASA ratio to 42.2 percent.

The broking house expects margins to be stable to positive, while controlled credit cost will drive the overall profitability. It has maintained its “buy” rating on the stock.

JPMorgan has given an "overweight" rating to the stock, with a target of Rs 220 a share. The bank has reported Q4 gross advances growth of 19 percent YoY and domestic advances growing 17 percent YoY, led by YoY 27 percent growth in domestic retail advances.

In addition, domestic deposits grew 13 percent YoY, resulting in a domestic loan-to-deposit ratio (LDR) of 76 percent.

JPMorgan expects the bank to deliver a 17 percent return on equity (RoE) in Q4FY23, which is in line with frontline private banks.

Morgan Stanley, too, has "overweight" rating and a target of Rs 220. The bank's domestic loan growth remains strong, driven by acceleration in domestic retail. In addition, the bank's overseas loans grew by 6 percent compared to 4 percent in the previous quarter, it said.

The bank's domestic deposit growth was steady, CASA growth accelerated with moderate term deposit growth.

Citi has given Bank of Baroda a "buy" rating with a target of Rs 210 a share. The bank's advances growth has been led by retail and overseas loans, with deposit growth following suit.

The brokerage, however, said the bank's net interest margins (NIMs) may be partially offset by its focus on building traction in the retail deposit base. Despite this, Citi expects profit to double in Q4 and report healthy net interest income (NII) growth of more than 30 percent YoY.

At 9.16 am, Bank of Baroda was quoting at Rs 171.50, up Rs 5.30, or 3.19 percent on the BSE.

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