Stock Market

BoB: BUY rating of brokerage after Q2 results, expects 29% return; Share is cheaper than Rs 110

Bank of Baroda share BUY call: After the September 2021 quarter results, the investment sentiment on Bank of Baroda stocks is looking good.

Bank of Baroda share BUY call: After the September 2021 quarter results, the investment sentiment on Bank of Baroda stocks is looking good. After strong loan growth and improvement in earnings, the brokerage house is bullish on this stock. Investors’ money in BoB shares has more than doubled in a year. Looking at the earnings, brokerage house Motilal oswal has given a buy advice (Bank of Baroda BUY) with a target of Rs 130. On Thursday, the share price was seen at Rs 101.

Better option in high valuation market

The valuation of the stock market is high. The market has been witnessing volatility in the recent few sessions. Many shares have become very expensive. At the same time, the valuation of Bank of Baroda’s stock is still attractive. So far this year, it has gained more than 57 percent. At the same time, in the last one year, this stock has given returns of more than 115 percent to the investors. Brokerage house Motilal Oswal has set a target of Rs 130 while advising to buy in this stock. In this sense, in this future investors can get a return of more than 28 percent from the current price.

What does brokerage report say

According to the report of brokerage house Motilal Oswal, the bank’s loan growth and earnings during the second quarter have been excellent. Lower provisioning and higher income support has been received. However, there is pressure in NII. There is an overall improvement in the asset quality of the bank. The GNPA / NNPA ratio of the bank has come down to 75bp/20bp on a quarterly basis. The brokerage house has increased its earnings estimate by 39%/14% for FY22E/FY23E. At the same time, RoA/RoE of 0.7%/10.9% is expected to remain till FY23E.

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Bank of Baroda: Financial Performance

Bank of Baroda reported a 24 per cent increase in its net profit to Rs 2,088 crore in the September 2021 quarter. The bank had earned a net profit of Rs 1,697 crore in the same quarter last year. However, the total income of the bank declined to Rs 20,270.74 crore during the July-September quarter. The total interest income of the bank also declined by 6.33 per cent to Rs 16,692 crore from Rs 17,820 crore in the year-ago quarter.

The asset quality of the bank has also improved in the September quarter. The gross NPA of the bank has come down to 8.11 percent. Gross NPA was 9.14 per cent in the year-ago period. During the September quarter, the bank has made a provisioning of Rs 2,753.59 crore for bad loans. There was a provisioning of Rs 2,811.05 crore in the same quarter last year.

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