IDFC First Bank share price jumps 12%, Bank of Baroda trades flat after Q1 results; what should investors do? Here's what brokerages recommend

Bank of Baroda (BoB) and IDFC First Bank reported strong numbers in the quarter ended July 2022. Bank of Baroda (BOB) reported a net profit of Rs 2,168 crore in the quarter ended June 2022, a 79.3% jump in Q1FY23, while IDFC First Bank on Saturday reported its highest ever net profit of Rs 474 crore for the quarter ended June 2022, against a net loss of Rs 630 crore in the year-ago quarter. 

Shares of Bank of Baroda were seen trading flat at Rs 116.35 per share on the BSE, while the IDFC First Bank stock surged more than 12% to Rs 42.25 a share on the exchange after clocking record net profit in Q1FY23.  

After June earnings, brokerages largely remained upbeat on these two banking stocks. Here is What they recommended:  

CLSA on IDFC First Bank  

Saying it is one of the fastest growing banks, the global brokerage house maintained an outperform rating on IDFC First Bank with a target price of Rs 41 per share.  

It was of the view that loan growth of the bank remains strong and core PPOP is also tracking well. "Healthy momentum in liabilities was seen, while the management guided for a stable NIM. Asset quality is also normalising," it said.   

Morgan Stanley on IDFC First Bank  

Morgan Stanley mginally raised the target price of IDFC First Bank from Rs 33 to Rs 34, however, it retained an underweight rating for the counter  

It said though results were in-line with MSe, however, the management indicated that credit costs could undershoot previous guidance. It said while expecting ROE to improve materially in F23 & F24 from 0.7% in F22, it will remain below COE.  

LKP Securities on Bank of Baroda (BoB) 

The brokerage feels that BoB is pivoting towards a profitable journey ahead. It revised the Bank of Baroda target price from Rs 128 to Rs 147, and recommended a Buy.  

"We expect the bank to post a ROA/ROE of 0.8%/11.5% by FY24E led by steady balance sheet growth along with higher PCR and improving asset quality. We value the standalone bank with PBV of 0.8xFY24E Adj. We recommend BUY rating with potential upside of 26%,"it said. 

Morgan Stanley on Bank of Baroda 

The global brokerage firm maintained an overweight stance on the banking counter and raised the target price from Rs 140 to Rs 155 per share.  

JP Morgan on Bank of Baroda  

JP Morgan retained an overweight rating too with a target price of Rs 130 per share.