This PSU bank stock went up 44% in a year, even though the market was down. Do you own it?

Bank of Baroda Shares: In the past year, BoB stock has returned 43.60%. On August 5, 2021, Bank of Baroda’s shares was worth Rs 82.45 each. The stock of Bank of Baroda is still seen as a good buy by experts. In a year, they think it could go up to Rs 147.

The bank’s net profit grew by 79.3% from the same time last year to Rs 2,168 crore in the quarter that ended in June (Q1FY23). This was due to a drop in the amount of money it had to set aside for bad loans.

During the same time last year, the Mumbai-based public sector lender made a net profit of Rs 1,209 crore (Q1FY22). The stock of the bank closed 0.81 percent lower on BSE on Friday, at Rs 116.25 per share.

Its net interest income (NII) went up by 12% from Q1FY22 to Q1FY23, from Rs 7,982 crore to Rs 8,838 crore. Its net interest margin (NIM) went down from 3.04 percent a year ago to 3.02 percent in Q1FY23. It also went down from March 2022, when it was 3.08 percent.

Sanjiv Chadha, the bank’s managing director and chief executive officer, said that NIMs should go up by 10 basis points in FY23.

BoB’s income from things other than interest fell sharply in Q1FY23, from Rs 2,863 crore to Rs 1,182 crore. Its treasury income, which is a big part of its other income, went down because bond yields went up. The bond portfolio had mark-to-market (MTM) losses.

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Gross non-performing assets (GNPAs) at the bank dropped from 8.86% in the same quarter last year to 6.26% in the same quarter this year. Net NPAs also went down, from 3.03 percent in June 2021 to 1.58 percent in June 2022.

Analysts at ICICI Securities think that when the NPA problem is solved, credit costs will go down. “Steady growth in the corporate book and strong demand in the retail segment will boost the overall growth trajectory.” While margin trajectory is helped by the faster repricing of loans when rates are going up. The brokerage firm said, “We expect return ratios to get better, which will help valuations.”

Emkay Global has a buy call on Bank of Baroda with a price target of Rs 140. The Bank of Baroda is worth Rs 121.7 on the market right now. Analysts say that it will take one year for the Bank of Baroda price to reach the set goal.

With a CET-1 ratio of more than 11% after the QIP, BoB is still well-capitalized among large PSBs and doesn’t pose any risk of dilution. It changed our earnings estimates for FY24/25E by 1%–3% and rolled over the TP to 0.7x June’24E ABV. This caused the TP to change to Rs 140. (up from Rs130).

Bank of Baroda is a bank company that was founded in 1911. (having a market cap of Rs 62,961.33 Crore).

For the quarter that ended on June 30, 2022, the company reported a Consolidated Total Income of Rs 21,576.76 Crore, which was down 3.98 percent from the previous quarter’s Total Income of Rs 22,470.46 Crore and up 1.04 percent from the same quarter last year, when the Total Income was Rs 21355.53 Crore. In the most recent quarter, the bank had a net profit after taxes of Rs 1,939.56 Crore.

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