52 Week High: Shares of this state-run bank hit record highs after impressive Q2 results

News Topical, Digital Desk : 52-Week High: Shares of state-owned Bank of Baroda Ltd. jumped 5% to an all-time high of ₹292.75 on Monday, November 3. This rally came after the bank reported strong results for the July-September quarter (Q2 FY26).

Following the bank's results, several brokerages maintained or upgraded their 'Buy' rating on the stock. HSBC maintained its 'Buy' rating and set a target price of ₹340. Nomura upgraded the stock to 'Buy' with a target price of ₹320. Investec also raised its target from ₹250 to ₹325, maintaining a 'Buy' rating.

HSBC stated that the bank's loan growth, improved net interest margin (NIM), and stable asset quality were key positives for the quarter. Foreign brokerages expect the bank's operating performance to remain strong, and further improvement in asset quality could boost results. HSBC raised its earnings estimates for FY26-FY28 by 5-7%. 

CLSA and Nomura's View: CLSA has an 'Outperform' rating on the bank and a target price of ₹325. However, CLSA said in a note that fee income and CASA performance remained weak. Fee income remained stable on a year-on-year basis, while the CASA ratio declined by 90 basis points. Nomura said that Bank of Baroda shares are currently trading at an attractive valuation of 0.9 times the estimated book value as of September 2027. The brokerage estimates the bank's return on assets (ROA) to be 1% and return on equity (ROE) to be 13.7% during FY26-FY28. 

Improvement in NIM and decline in credit costs: Bank of Baroda surprised the market by reporting a 5 basis point increase in NIM to 2.96% in Q2, as against expectations of a decline following the 100 basis point repo rate cut in June. Improvement in asset quality led to a sharp decline in credit costs. However, the bank warned that provisioning may increase after the implementation of the Expected Credit Loss (ECL) accounting framework between 2027 and 2030. 

Earnings and Profit Data The bank's net interest income (NII) grew 3% year-on-year, supported by better loan pricing, liabilities management, and a tax refund of ₹750 crore. However, pre-provision operating profit (PPOP) declined 20% as other expenses increased 7%. Provisioning decreased 47% QoQ, and credit costs declined 26 basis points. The bank's international business segment reported no new bad loans (NPAs). According to the results, the bank's net profit (PAT) declined 8% year-on-year but increased 6% compared to the previous quarter. ROA increased 4 basis points to 1.07%.

Stock Performance: Bank of Baroda shares were trading at ₹288.05, up 3.6% on Monday. The stock has gained nearly 20% so far in 2025.

Read More: SIP Mistakes: You are not getting the expected profit from SIP, are you making these mistakes?