Bank of Baroda shares surge 5% after strong Q2 results; brokerages bullish, check target prices

At around 12.30, the stock was trading 2.60 percent higher and quoting Rs 244.70. Bank of Baroda Q2 results Bank of Baroda reported a 31 percent jump in July-September quarter consolidated net profit at Rs 6,737.28 crore. On a standalone basis, the lender reported its highest-ever quarterly net profit of Rs 6,532 crore, registering a growth of 35.8 percent year-on-year. The core net interest income, which represents the difference between interest earned and interest paid, went up by 9 percent to Rs 13,026 crore on the back of 18.3 percent growth in advances and a 0.22 percent compression in net interest margin at 2.74 percent.

Other income nearly doubled, rising 96 percent to Rs 6,881 crore, largely driven by gains associated with the NSE's listing. The bank booked a cash profit of Rs 1,340 crore from the partial sale of its NSE holdings and also recorded valuation gains on its remaining stake. The other income jumped 96 percent to Rs 6,881 crore during the quarter, which was largely driven by gains associated with NSE's listing.

The bank booked a cash profit of Rs 1,340 crore on the part-sale of its holdings in the bourse, and additionally, there were valuation gains on the residual stake as well. The bank, which had a 15 percent growth in corporate advances in Q1, is maintaining the FY27 guidance of 10 percent growth on the large value loans. From an asset quality perspective, fresh slippages reduced to Rs 2,392 crore from Rs 3,183 crore in the quarter-ago period, and the gross non-performing assets ratio improved to 1.78 percent from 1.99 per cent at June-end.

Brokerages on Bank of Baroda share price Following the quarterly results, brokerages remained positive on the stock, with Equirus Securities retaining its 'Long' rating and a target price of Rs 300, implying an upside potential of around 26 percent from the previous close. JM Financial upgraded the stock to 'Buy' with a target price of Rs 280, while Axis Securities maintained its 'Buy' rating with a target price of Rs 290.

Equirus Securities on Bank of Baroda share: Long, Target price Rs 300 with an upside potential of 26% Brokerage Equirus Securities retained its 'Long' recommendation on Bank of Baroda and set a target price of Rs 300, valuing the stock at 0.9 times its estimated adjusted book value (ABV) for September 2028. The brokerage noted that the lender's standalone profit after tax of Rs 6,532 crore beat expectations, although the NSE stake-sale gains supported the earnings rebound.

The bank also deployed part of the gains towards additional prudential provisions. Equirus highlighted slippages were under control at 69 basis points from 91 basis points in the previous quarter, while core credit cost remained low at 18 basis points. The brokerage also pointed to an improvement in the bank's growth outlook. Management raised its FY27 credit growth guidance to 13-15% from 12-14% earlier and deposit growth guidance to 11-13% from 10-12%.

The lender retained its FY27 NIM guidance of 2.75-2.95% and expects return on assets (RoA) to exceed 1% in the second half of FY27. Equirus expects the bank to benefit from surplus liquidity pending production deployment foreign currency non-resident bank (FCNR(B)) deposits and repricing of repo-linked advances, which account for around 38% of its loan book. “We broadly retaining our FY27 estimates.

We model FY27E/FY28E RoA at 0.9%/1.0%. We roll forward to a Sep'27 TP of Rs 300, based on 0.9x Sep'28 ABV. Retain LON,” it added. JM Financial on Bank of Baroda share: Buy, Target price Rs 280 Domestic brokerage firm JM Financial upgraded Bank of Baroda to 'Buy' from 'Add' and raised its target price to Rs 280 from Rs 270, citing attractive valuations, improving growth visibility, stable asset quality and the potential for margin recovery.

The brokerages said BoB delivered a healthy quarter with core PBT being 8% higher than its estimates. While NII and core income were broadly in line with expectations, higher-than-expected opex got more than offset by lower core provisions (excluding Rs 16 billion prudential provisioning) leading to a beat on core PBT. Business momentum remained strong with advances and deposits growing 18% and 16% YoY, respectively.

The brokerage also highlighted the bank’s calculated NIM was flat QoQ (2.57%); when adjusted for IT-refund, NIM was up 2bps QoQ. “Management retained FY27 NIM guidance of 2.75–2.95% and expects improvement in H2FY27, supported by repo-linked asset repricing. Asset quality continued to strengthen with gross slippages moderating to 0.82%. Credit cost of 66bps was largely elevated by prudential provisioning,” it said.

The brokerage also highlighted the bank's relatively limited exposure to insurance commission income, which reduces the potential impact of regulatory changes affecting such income. In addition, existing floating provisions of around Rs 2,500 crore and fresh prudential provisions of Rs 1,600 crore could help the lender navigate the transition to the expected credit loss (ECL) provisioning framework.

“Since our downgrade to ADD in January 2026, the stock has corrected around 20%, making valuations attractive. Now, with improving growth visibility, benign asset quality, limited insurance-related earnings risk and potential margin recovery, we believe the risk-reward has turned favourable, warranting an upgrade in our stance,” it noted. The brokerage has raised FY27 earnings per share estimates by 16% and broadly keep FY28 EPS estimates unchanged.

It valued the stock at 0.7 times estimated FY28 core book value per share to arrive at its revised target price of Rs 280. Axis Securities on Bank of Baroda: Buy, Target Price Rs 290 Axis Securities maintained its 'Buy' recommendation on Bank of Baroda with a target price of Rs 290, citing the easing NIM pressure as rate cycle reverses, sustained credit growth and the potential for a return on assets of around 1%.

The brokerage said the bank's NIM contraction was relatively shallow in Q2 FY27 and expects margins to improve in the second half as the interest-rate cycle turns. Around 38% of the loan book is linked to external benchmarks, allowing the bank to benefit from repricing. Additionally, the bank has undertaken repricing of its non-MCLR-linked corporate loans during Q2, with the full benefit expected to accrue from Q3 onwards, it said.

Axis Securities expects NIMs to remain in the range 2.8-2.9% over FY27-FY29, within management's guidance of 2.75-2.95%. The brokerage also sees scope for improvement in fee income as the bank reviews its fee structure to improve monetisation across customer relationships and banking products. “BoB sees meaningful headroom to improve fee income, particularly considering the pace of growth and overall customer franchise.

Management indicated that it is undertaking a comprehensive review of its existing fee structure to identify opportunities for better monetisation across its various banking relationships and product offerings. The exercise is expected to start reflecting positively over the next 2 quarters, with management hopeful of a gradual improvement in fee generation,” it said. On the growth front, Axis Securities highlighted that the credit growth guidance was upgraded to 13-15%.

Following a strong performance in H1 on credit growth, partly supported by FCNR(B) lending, management remains confident of growth momentum sustaining and has revised its credit growth guidance upwards to 13-15% vs 12-14% earlier. “Management highlighted a healthy growth pipeline across both RAM and corporate segments, with incremental RAM advances expected to contribute Rs 610 Bn and the corporate sanction pipeline standing at around Rs 600 Bn.

Moreover, the seasonal strength generally visible in H2, healthy loan pipeline in both retail and corporate along with a further push from the liquidity availability should enable BoB to deliver strong growth in FY27 and healthy ~14% CAGR advances growth over FY26-29E,” it added. Expressing optimism over the sector’s outlook, the brokerage said that BoB's earnings trajectory is expected to improve, with 1% RoA delivery in sight supported by a favourable NIM trajectory aided by reversal of the rate cycle, sustained credit growth and contained asset quality.

“Furthermore, the bank's strong underlying asset quality, low SMA pool, healthy collection efficiency and improving slippage trends (guidance of 1-1.25% in FY27) should keep credit costs well controlled (<60bps in FY27), with the additional prudential provisioning providing an added balance-sheet cushion,” it stated.