Bank of Baroda stock fluctuates after mixed Q1 show; hold or exit?

Business Standard

18 hours ago

Shares of Bank of Baroda recouped losses after it fell over 2 per cent on Monday morning deals as analysts termed the lender's first quarter performance as a mixed bag, with a modest growth in net profit.
The public-sector lender's stock fell as much as 2.33 per cent during the day to ₹237.7 per share, the biggest intraday rise since June 19 this year. However, the stock pared losses to trade 0.3 per cent higher at ₹244.3 apiece, compared to a 0.02 per cent decline in Nifty 50 as of 11:00 AM.
Shares of the company have been in a range-bound pattern since June. The counter has risen 1.5 per cent this year, compared to a 5 per cent advance in the benchmark Nifty 50. Bank of Baroda has a total market capitalisation of ₹1.26 trillion.
Bank of Baroda Q1 results
The lender's net profit grew 1.9 per cent year-on-year (Y-o-Y) to ₹4,541 crore in the first quarter of 2025-26 (Q1FY26), aided by treasury income, amid pressure on net interest margin.
Net interest income (NII) -- the difference between interest earned and interest expended -- fell 1.4 per cent Y-o-Y to ₹11,435 crore. Net interest margin (NIM) from domestic operations fell to 2.91 per cent in Q1FY26, down from the 3.18 per cent in Q1FY25.
BoB reported 12.6 per cent Y-o-Y credit growth in overall advances to ₹12.07 trillion. The domestic book grew by 12.4 per cent. While retail advances increased 17.5 per cent, corporate loans saw 4.2 per cent Y-o-Y growth in Q1FY26. Home loans grew by 16.5 per cent.
Bank of Baroda asset quality
The asset quality profile improved with gross non-performing assets (NPAs) declining to 2.28 per cent from 2.88 per cent a year ago. The net NPAs fell to 0.60 per cent from 0.69 a year ago. The provision coverage ratio, including those for write-offs, stood at 93.18 per cent in June 2025.
Lender's capital adequacy ratio stood at 17.19 per cent with the common equity tier I (CET-1) of 17.61 per cent.
Analysts on Bank of Baroda Q1
The lender reported a mixed performance in Q1FY26, marked by slower loan growth, higher slippages, and a relatively resilient NIM, Nuvama Institutional Equities said. While BoB's international loan quality remains more volatile than peers, overseas loan growth continues to outpace domestic, Nuvama said.
NIM resilience was aided by slower marginal cost of funds-based lending rate (MCLR) cuts and repricing of bulk deposits, despite having a similar external benchmark lending rate (EBLR) mix of 48 per cent as peers. However, Nuvama anticipates a sharper NIM decline for BoB in the coming quarters. Nuvama raised its target price to ₹280 (from ₹260), and maintained its rating at 'Buy'.
The near-term pressure on NIMs is expected to continue before a potential recovery in the second half of the financial year, Axis Securities said. A sharper-than-expected contraction in NIMs could pose risks to the bank's ability to deliver a 1 per cent return on assets (RoA), it said
The bank is actively working to strengthen its fee income profile, while operating expense growth is expected to remain controlled and slightly below business growth, Axis said. "With no major asset quality concerns on the horizon, credit costs are likely to stay contained, it added. ALSO READ:
Analysts at Antique Stock Broking said that the bank delivered a mixed performance, with RoA supported by higher non-core income and a relatively smaller contraction in NIM compared to peers. However, elevated credit costs and higher slippages were notable concerns, it said.
Bank of Baroda has consistently maintained RoA above 1 per cent for the past 12 quarters, and this trend is expected to continue, Antique said. The stock appears reasonably priced, with the brokerage maintaining its 'Buy' rating.