Brokerage suggests buying this PSU bank stock that has given 165% returns in 2 years; know target price

PSU bank stock to buy: The stock market is closed today, May 20, due to the fifth phase of Lok Sabha Elections 2024. On Saturday, May 18, domestic equity benchmarks Nifty50 and Sensex ended with mild gains in the first of two special trading sessions led by buying interest in IT, financial, and energy shares. BSE and NSE conducted the special sessions on Saturday.

Meanwhile, government banks have earned record profits so far in the financial year 2023-24. During this period, the total profit of 12 banks increased to Rs 1,42,129 crore. Bank of Baroda (BoB) stood second with Rs 18,676 crore.

After its fourth quarter results for the financial year 2024, brokerage ICICI Securities is bullish on BoB stock. 

Bank of Baroda- Share price target

According to the ICICI Securities report, BoB's balance sheet growth remained stable with advances led by retail loans growing 12.5 per cent ​​YoY, while liabilities grew 10.2 per cent YoY with increased reliance on bulk deposits. Employee expenditure remains high amid the provision for salary settlement of Rs 800 crore for retirees.

The bank made provisions of Rs 550 crore in Q4FY24, which led to increased credit costs, and impacted earnings, which grew 2.3 per cent year-on-year. GNPA ratio/NNPA ratio declined sequentially by 16/2 bps to 2.92%/0.68 per cent. With a partial government guarantee and 100 per cent provision on the stressed aviation account, the management is confident of adequate recovery.

According to the brokerage, guidance remains stable with expected forward growth of 12-14 per cent, while margins remain stable at 3.15 per cent and ROA at 1.1 per cent. At the current price, the stock is trading at 1x FY26E ABV, which offers an opportunity for further upside. 

Brokerage ICICI Securities has maintained a 'buy' rating on 'Bank of Baroda' stock with a target price of Rs 300 per share. This implies an upside around 15 per cent from its current price. 

On Saturday, BoB shares closed at Rs 262.6, up 1.3 per cent on BSE. 

BoB Q4 earnings

For the quarter ended March of the FY24, the lender's net profit inched higher by over 2 per cent to Rs 4,886 crore as against Rs 4,775 crore in the same period last year. In the previous December ended quarter, the metric came in at Rs 4,579 crore.

Net interest income (NII) for the reporting quarter surged 2.3 per cent on-year to Rs 11,793 crore when compared to Rs 11,525 crore in the year-ago period.

Total provisioning at the lender during the period declined over 8 per cent to Rs 1,302 crore from Rs 1,421 crore in the same period last year.

BoB share price history

In the past six months, the stock has zoomed over 34 per cent. It has recorded 45 per cent gains in one year and 165 per cent gains in two years.