Majority of Public and Private-sector Banks have published their Q4FY24 results, and various Brokerages, based on the total income levels, NPAs, and interest margins, have provided various share price targets.
Listed below is one such Public-sector Bank stock under Rs 300 in which a Domestic Brokerage gave a ‘Buy’ call with a potential upside of more than 30 percent:
Bank of Baroda
With a market capitalization of Rs 1.36 lakh crores, the stocks of Bank of Baroda, a Public-sector bank based in India, started their trading session on Wednesday at Rs 261.55 and closed the session at Rs 263.90, gaining approximately 1.20 percent compared to the previous closing levels of Rs 260.85 apiece.
Axis Securities, one of the well-known Brokerages based in India, has given a ‘Buy’ recommendation on the stocks of Bank of Baroda and gave a target price of Rs 340 indicating a potential upside of around 29 percent compared to the prevailing share price level.
The investment rationale for providing such a recommendation pertains to improving asset quality, credit growth gaining momentum, stable levels of NIMs, and many more.
The Bank’s credit offtake has remained strong in the ‘Retail’ segment, growing around 6 percent QoQ and 21 percent YoY. In addition, the Bank’s Net Interest Margins (NIMs) improved by approximately 17bps (0.17 percent), with QoQ movement from 3.10 percent to 3.27 percent
Digging into the recent quarterly financials, the Bank’s prime business parameters, viz, its total income as well as net profit numbers, showed positive movements with the former increasing from Rs 30,042 crores during Q3FY24 to Rs 31,072 crores during Q4FY24, and the latter, during the same period, rising from Rs 4,815 crores to Rs 5,160 crores.
Coming onto the Bank-specific metrics, the net non-performing assets (NPAs) have consistently reduced in the past couple of years with the most recent movement being a fall from 0.89 percent during FY23 to 0.68 percent during FY24.
In addition, the net interest margin (NIM), keeping the time horizon the same, marginally increased from 2.89 percent to 2.92 percent.
According to the latest presentations, the Bank’s mix of Gross Domestic Credit (March 2024) represents nearly 42 percent attributed to the ‘Corporate’ segment, 28 percent to the ‘Retail’ segment, 15 percent to the ‘Agriculture’ segment, and the remaining share towards the ‘MSME’ segment.
Incorporated in 1908, Bank of Baroda is a banking institution based in India that provides various services, some of which include personal, commercial, and corporate banking solutions to individuals, businesses, and other corporate customers.
Written by Amit Madnani
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