Bank of Baroda shares gain over 2% after Q4 results. Should you buy, sell or hold?

Synopsis

Bank of Baroda shares rose after the state-run lender reported an 11.2% year-on-year rise in Q4 consolidated net profit to Rs 5,616 crore, driven by a 9% growth in net interest income. However, the bank’s non-interest income declined 16% during the quarter.

Shares of Bank of Baroda gained over 2% to their day’s high of Rs 270 on the BSE on Monday after it reported a consolidated net profit of Rs 5,616 crore for the March quarter, registering an increase of 11.2% from Rs 5,048 crore reported in the corresponding period last year.

The state-run lender’s net interest income (NII) rose 9% year-on-year to Rs 12,494 crore in Q4FY26 compared with Rs 11,494 crore in the same quarter of the previous financial year. However, non-interest income declined 16% during the quarter under review to Rs 3,967 crore from Rs 4,735 crore reported in Q4FY25.

Asset quality improved during the quarter, with gross NPAs declining 37 basis points to 1.89% from 2.26% in Q4FY25. Net NPA also improved to 0.45% from 0.58%, a decline of 13 basis points year-on-year.

Bank of Baroda shares: Buy, sell or hold?

Citi maintained its “Buy” rating on Bank of Baroda share price while cutting the target price to Rs 340 from Rs 360, an upside of 29%. Management has raised FY27 loan growth guidance to 12-14%. Citi highlighted that slippages increased sequentially, primarily due to stress in the MSME and agriculture segments. The brokerage has trimmed its earnings estimates for the bank, citing expectations of structurally softer core NIMs going forward.

Motilal Oswal maintained its “Neutral” rating on Bank of Baroda stock with a target price of Rs 300, implying an upside potential of 14%. The brokerage said Bank of Baroda delivered a healthy performance in the March quarter, with net interest margins improving 10 basis points quarter-on-quarter, supported by interest income from income tax refunds. Motilal Oswal noted that the cost of funds appears to have largely bottomed out, while further support is expected from improvement in yields.

While Motilal Oswal does not see any major concerns around asset quality, it has factored in a mild rise in credit costs to 50-60 basis points from 40 basis points in FY26, considering the ECL transition.

Elara Capital maintained its “Accumulate” rating on Bank of Baroda while reducing the target price to Rs 314 from Rs 345 (19% upside). The brokerage said the bank’s core operating trends remained steady in the March quarter, although earnings were supported by multiple one-off items. The brokerage remains cautious on the bank’s NIM trajectory due to liquidity constraints and the high credit-deposit ratio. However, it added that the recent underperformance in the stock has improved the risk-reward profile relative to PSU banking peers, with any re-rating likely dependent on consistent delivery of core profitability.

Separately, Goldman Sachs has included Bank of Baroda in its basket of 12 “alpha” ideas, which comprises large and liquid stocks where foreign investor ownership and positioning remain relatively light, while valuations are considered reasonable with potential for outperformance when market sentiment improves.

Goldman Sachs noted that the state-run lender is trading at nearly seven times forward earnings, while foreign institutional investors hold around 27% of the free float after a marginal reduction during the previous quarter.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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