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What should investors do with Bank of Baroda post Q4 results: Buy, sell or hold?

Bank of Baroda Q4 results showed a loss of Rs 1,046.5 crore despite falling provisions as tax costs hit the balance sheet but higher other income and operating profit helped it curtail losses.

May 31, 2021 / 11:50 AM IST
 
 
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Bank of Baroda share price slipped 2 percent in the early trade on May 31 after the public sector lender posted a loss of Rs 1,046.5 crore for the quarter ended March 2021 despite falling provisions as tax costs hit the balance sheet. However, higher other income and operating profit helped the bank curtail losses for the quarter.

Profit in the year-ago quarter stood at Rs 506.59 crore, the bank said on May 29 while sharing the quarterly numbers. The tax cost for the March quarter was at Rs 3,726.07 crore against a tax writeback of Rs 2,229.85 crore in the corresponding quarter of last fiscal.

Net interest income, the difference between interest earned and interest expended, grew by 4.5 percent year-on-year to Rs 7,106.62 crore in Q4FY21, with credit growth of 1.83 percent at Rs 7.51 lakh crore and deposit growth of 2.22 percent at Rs 9.66 lakh crore YoY.

Also read: Bank of Baroda posts Q4 loss at Rs 1,046.5 crore despite lower provisions; asset quality improves

Here is what brokerages have to say about the stock and the company after the March quarter earnings announcement:

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JP Morgan | Rating: Overweight | Target: Rs 110

The profit was impacted by a write down of DTA on a shift to a new tax regime, however adjusting for the same, the PAT would have been Rs 2,230 crore.

The asset quality print was a positive with proforma QRs slippage at Rs 3,000 crore.

JP Morgan believes slippages will continue to trend down in FY22 as well and cost jaws should also be positive going ahead.

Credit Suisse | Rating: Neutral | Target: Rs 75

The growth continues to lag, while asset quality stress broadly contained. CET is up to 11 percent and allows for a pick-up in growth. Given stress in SMEs & uncertainty about the second wave, credit costs will stay elevated. Credit Suisse raises FY22 EPS estimate by 8 percent on higher recoveries.

Morgan Stanley | Rating: Equal-weight | Target: Rs 100

The Q4 PBT is 137 percent above estimate, given higher non-interest income. The higher non-interest income was partly offset by higher opex/provisions.

The asset quality trends were better than expected. CET-I ratio improved to 10.9 percent, helped by capital raise during the quarter.

CLSA | Rating: Buy | Target: Raised to Rs 130

It was a better-than-expected Q4 performance. The Q4 surprised positively with <50 bps of slippage and strong adjusted NII performance.

The company reported a pre-tax RoE of 8 percent in FY21 and expects RoE to inch to 10-11 percent by FY23.

At 0920 hours, Bank Of Baroda was quoting at Rs 82.15, down Rs 1.70, or 2.03 percent on the BSE.

The share touched a 52-week high of Rs 99.80 on February 10, 2021 and a 52-week low of Rs 36.70 on May 26, 2020. It is trading 17.69 percent below its 52-week high and 123.84 percent above its 52-week low.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



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Moneycontrol News
first published: May 31, 2021 09:39 am
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