Shares of Bank of Baroda – India’s second largest public sector lender – were in demand during Tuesday’s trading session a day after the company announced a robust fourth quarter business update.

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The stock surged as high as 4.5 per cent to touch the day’s high level of Rs 173.70 per share on the BSE. It quoted Rs 171.20 apiece, up Rs 5 or 3.01 per cent at around 10:50 AM from Monday’s closing of Rs 166.2 a share.

BoB Q4 business update

Bank of Baroda reported a 16.8 per cent year-on-year (YoY) in total business at Rs 21,77,307 crore as of March 31, 2023, against Rs 18,64,059 crore in the year-ago quarter, the state-owned lender said in a business update for March quarter of previous fiscal.

While the bank’s total deposits grew by 15.1 per cent at Rs 12,03,604 crore against Rs 10,45,939 crore, while domestic deposits surged by 13 percent to Rs 10,47,390 crore from Rs 9,27,011 crore YoY.

BoB hikes MCLR rates

Moreover, Bank of Baroda also hiked its MCLR or marginal cost of funds-based lending rate for one year by five basis points, effective April 12. MCLR is the key interest rate below which a bank cannot lend money.

Bank of Baroda's one-year MCLR will be 8.6 per cent, instead of the current 8.55 per cent from Wednesday, according to a regulatory filing.

The hike in the MCLR by Bank of Baroda comes days after the RBI announced a status quo on the repo rate — the key interest rate at which it lends money to commercial banks — as well as policy stance but did not premise the end to the current cycle of monetary policy tightening.

Brokerages upbeat on BoB

Amid a strong Q4 business update, global brokerages are upbeat on Bank of Baroda shares as Morgan Stanley and JP Morgan each has an ‘overweight’ rating, while Citi gives a ‘buy’ call on the stock.

 

Brokerages Rating Price Target
Morgan Stanley Overweight Rs 220
Citi Buy Rs 210
JP Morgan Overweight Rs 220

Domestic loan growth remains strong and was driven by an acceleration in domestic retail, Morgan Stanley said in its comment, adding that CASA (current and saving accounts) growth accelerated while term deposit growth moderated during the quarter.

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