Bank of Baroda share price targets: Should you buy PSU bank stock BOB post Q1?
BOB reported a mixed bag with slower loan growth, higher slippage and a more resilient NIM in Q1FY26.
- Jul 28, 2025,
- Updated Jul 28, 2025 9:16 AM IST
Bank of Baroda (BOB) came out with mixed results for the June quarter of FY26. The state-owned lender reported a decline in loan growth and an increase in slippage, presenting a diverse picture to analysts and investors. The PSU bank stock settled at Rs 243.30 on Friday and a couple of brokerages suggested targets of Rs 260-303 on the stock.
Nuvama Institutional Equities said BOB reported a mixed bag with slower loan growth, higher slippage and a more resilient NIM in Q1FY26. "Loans fell 2 per cent QoQ versus growth for PSU peers," it said.
The brokerage noted a 21% quarter-on-quarter rise in slippage, predominantly due to an overseas loan issue. Additionally, the uptick in personal loan non-performing loans (NPLs) contributed to the overall slippage increase.
The bank's net interest margin (NIM) showed resilience despite the challenges, decreasing by only 7 basis points quarter-on-quarter. However, Nuvama cautioned that "we see higher-than-peers’ NIM decline in subsequent quarters" and revised their earnings target price to Rs 280, maintaining a 'BUY' rating.
MOFSL echoed these sentiments, observing an earnings beat supported by stronger-than-expected other income, though provisions remained high. The NIM contracted to 2.91%, with management predicting further moderation. MOFSL reiterated a 'Neutral' rating with a target price of Rs 260. The management expects FY26 NIM to remain in the ~2.85-3.0% range, indicating a cautious outlook.
The bank's international loan quality was noted as more volatile compared to peers, yet its overseas growth outpaced domestic growth. Analysts attributed the NIM's performance to bulk deposit repricing and slower MCLR cuts. This strategic approach has helped the bank maintain a competitive edge in challenging times.
Nirmal Bang Institutional Equities also provided insights, valuing BOB at 1x its June 2027 estimated adjusted book value. They set a target price of Rs 303, factoring in subsidiary valuations and a holding company discount. They maintain a 'Buy' rating, projecting a compound annual growth rate of 11.3% for loans over FY25-FY27. This reflects their confidence in the bank's long-term growth potential.
Overall, the bank's performance in the quarter reflects both challenges and opportunities. The increase in slippages, especially from international accounts, and a decline in provision coverage ratio to 74% from 75% are areas of concern.
Despite these hurdles, the bank's strategic focus on international growth and its ability to maintain a stable NIM in the face of industry-wide pressures provide some optimism for stakeholders. The varied insights from brokerages indicate a cautious yet hopeful outlook, with expectations for growth in certain sectors.
These analyses suggest that while BOB faces immediate challenges, especially in international loan quality and slippage management, the bank's long-term prospects remain promising with strategic adjustments and careful risk management. The bank's ability to adapt to changing market conditions will be crucial in navigating future uncertainties.
Bank of Baroda (BOB) came out with mixed results for the June quarter of FY26. The state-owned lender reported a decline in loan growth and an increase in slippage, presenting a diverse picture to analysts and investors. The PSU bank stock settled at Rs 243.30 on Friday and a couple of brokerages suggested targets of Rs 260-303 on the stock.
Nuvama Institutional Equities said BOB reported a mixed bag with slower loan growth, higher slippage and a more resilient NIM in Q1FY26. "Loans fell 2 per cent QoQ versus growth for PSU peers," it said.
The brokerage noted a 21% quarter-on-quarter rise in slippage, predominantly due to an overseas loan issue. Additionally, the uptick in personal loan non-performing loans (NPLs) contributed to the overall slippage increase.
The bank's net interest margin (NIM) showed resilience despite the challenges, decreasing by only 7 basis points quarter-on-quarter. However, Nuvama cautioned that "we see higher-than-peers’ NIM decline in subsequent quarters" and revised their earnings target price to Rs 280, maintaining a 'BUY' rating.
MOFSL echoed these sentiments, observing an earnings beat supported by stronger-than-expected other income, though provisions remained high. The NIM contracted to 2.91%, with management predicting further moderation. MOFSL reiterated a 'Neutral' rating with a target price of Rs 260. The management expects FY26 NIM to remain in the ~2.85-3.0% range, indicating a cautious outlook.
The bank's international loan quality was noted as more volatile compared to peers, yet its overseas growth outpaced domestic growth. Analysts attributed the NIM's performance to bulk deposit repricing and slower MCLR cuts. This strategic approach has helped the bank maintain a competitive edge in challenging times.
Nirmal Bang Institutional Equities also provided insights, valuing BOB at 1x its June 2027 estimated adjusted book value. They set a target price of Rs 303, factoring in subsidiary valuations and a holding company discount. They maintain a 'Buy' rating, projecting a compound annual growth rate of 11.3% for loans over FY25-FY27. This reflects their confidence in the bank's long-term growth potential.
Overall, the bank's performance in the quarter reflects both challenges and opportunities. The increase in slippages, especially from international accounts, and a decline in provision coverage ratio to 74% from 75% are areas of concern.
Despite these hurdles, the bank's strategic focus on international growth and its ability to maintain a stable NIM in the face of industry-wide pressures provide some optimism for stakeholders. The varied insights from brokerages indicate a cautious yet hopeful outlook, with expectations for growth in certain sectors.
These analyses suggest that while BOB faces immediate challenges, especially in international loan quality and slippage management, the bank's long-term prospects remain promising with strategic adjustments and careful risk management. The bank's ability to adapt to changing market conditions will be crucial in navigating future uncertainties.