Bank of Baroda shares zoom 10%, top Nifty Bank gainer; brokerages raise target price

Bank of Baroda (BoB) shares zoomed 10 per cent on Monday after the second-largest state-run lender logged a 59 per cent year-on-year jump in net income at Rs 3,313 crore for the September quarter. The net income increased as a result of improvement in asset quality along with margin expansion. The scrip surged 10 per cent or Rs 14.45 to trade at Rs 159 in early trade. The counter was also the top gainer in the Nifty Bank. Earlier on Friday, the share of BoB had closed at Rs 144.55. 

Several brokerages have maintained a 'Buy' rating and raised the target for the scrip. Brokerage firm CLSA, has raised the target to Rs 185 from Rs 155. Similarly, Morgan Stanley has maintained an 'overweight' rating with the new target price of Rs 195. While Citi has maintained a 'buy' rating with a new target of Rs 164, Macquaire has maintained a 'Neutral' rating with a target of Rs 115. 

It is to be noted that the scrip has given a positive return of 91.59 per cent so far this year. However, this comes down to 51.96 per cent when we talk about the performance of the share in the last one year. 

The 52-week high and low of the Bank of Baroda shares are Rs 161.60 and Rs 77.05. The scrip hit an all-time high of Rs 206 on October 26, 2017 and an all-time low of Rs 36 on May 20, 2000.

The Mumbai-headquartered bank's total income rose to Rs 23,080 crore in the reporting quarter from Rs 20,271 crore a year ago.

The key profitability metric net interest income, which is what the bank earned after paying interest on its funds, soared 34.5 per cent to Rs 10,714 crore, buoyed by a 48 bps expansion in the margin (net interest margin in banking parlance) to 3.33 per cent.

The lender improved its asset quality, with gross non-performing assets (NPAs) coming down to 5.31 per cent or at Rs 46,374 crore in the reporting period from 8.11 per cent a year ago.

Similarly, net NPAs more than halved to 1.16 per cent at Rs 9,672 crore from 2.83 per cent or Rs 19,000 crore a year ago.

As a result, provisions for bad loans and contingencies declined to Rs 1,627.5 crore from Rs 2,753.6 crore in the year-ago period.

Attributing the robust set of numbers to overall good performance, Sanjiv Chadha, the managing director and chief executive of the bank, said there are primarily four pillars to the Q2 numbers.

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