Buy Bank of Baroda; target of Rs 175: Emkay Global Financial

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26 Aug, 2025 12:21

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Emkay Global Financial's research report on Bank of Baroda

Bank of Baroda (BoB) reported a strong beat on PAT at Rs33.1bn (vs our est of Rs23.7bn), mainly led by robust growth, sharp 31bps QoQ jump in margins (including one-off interest recovery on upgradation of lumpy account and swap unwinding) to 3.3% and lower LLP, as NPA ratio declined 94bps QoQ due to higher recoveries/w-offs. Strong credit growth at 21% YoY/5% QoQ was supported by continued strong traction in the retail and overseas book. Bank expects domestic corporate growth to accelerate too, more so in the seasonally-strong Q4. This, coupled with continued asset re-pricing, should keep margins healthy. Bank guides for ~0.9% RoA in FY23 and ~1% in FY24 on the back of better growth/moderation in LLP, partly offset by increase in staff cost (Rs2.5bn per quarter) due to the impending new wage negotiations. The MD’s current term is likely to expire in Jan23, but could be extended by 6 months by the government.

Outlook

We have revised our earnings for FY23-25E by 18%-22% and the rollover TP to 0.8x Sep24E ABV, leading to revision in TP to Rs175/share (up from Rs140). We retain our BUY rating on the stock.

For all recommendations report, click here

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Bank of Baroda - 07-11-2022 - emkay