After SBI, this PSU bank crosses ₹1 lakh crore m-cap

Bank of Baroda (BoB), the country’s second-largest public sector bank after State Bank of India, has entered ₹1 lakh crore market capitalisation on domestic exchanges to become the second public sector lender to enter the elite club. State Bank of India (SBI) was the first PSU bank to achieve this milestone, while its current m-cap stands at ₹5.06 lakh crore.

The rise in market capitalisation (m-cap) of BoB was driven by recent rally in the shares of the state-owned lender. The share price of Bank of Baroda has more than doubled in the last one year, from its 52-week low of ₹89.90 on June 20, 2022, to ₹194.85 in intraday today. The PSU bank touched a 52-week high of ₹197.2 on December 9, 2022. The counter has surged 110% in the last one year; over 5% in six months; and 6% in a month.

On Monday, Bank of Baroda shares opened higher for the second straight session and rose as much as 3.6% to hit an intraday high of ₹194.85 on the BSE, while the m-cap climbed to ₹100,400 crore. Early today, the bank shares opened marginally higher at ₹188.80, against the previous closing price of ₹188.10. The PSU bank has risen over 6.2% in the last two sessions. On the volume front, there was a surge in buying as 13 lakh shares changed hands over the counter as compared to two-week average volume of 4.81 lakh stocks.

In the March quarter of FY23, Bank of Baroda (BOB) delivered an expected result on the operating and assets quality front. The Vadodara-headquartered bank clocked its highest quarterly net profit of ₹4,775 crore in Q4FY23, up 168% from ₹1,779 crore in the year-ago period. For the full financial year, the bank recorded a profit of ₹14,110 crore, up 94% from ₹7,272 crore in the previous fiscal.

Net interest income for the bank rose 34% year-on-year to ₹11,525 crore, while other income also rose year-on-year to ₹3,466 crore. On the asset quality front, the gross non-performing asset ratio fell by 74 basis points sequentially to 3.79% in March quarter of FY24, while net NPA improved to 0.89% as compared with 0.99% in Q3FY23.

Post Q4 results, most analysts remain bullish on the stock and maintain a “Buy” rating on Bank of Baroda. Prabhudas Lilladher ratained a “Buy” call on the stock and raised target price from ₹220 to ₹235.

JM Financial also maintained “Buy” rating on the PSU bank with a revised price target of ₹235 from ₹195 estimated earlier.

Another brokerage, LKP Securities also recommended “Buy” with a price target of ₹239, citing steady balance sheet growth along with higher provision coverage ratio (PCR) and improving asset quality.

The bank in its Q4 earnings report also announced a dividend of ₹5.5 per share for FY23, subject to approval at the ensuing 27th Annual General Meeting (AGM). The bank will hold its AGM on July 7 and will approve and declare the dividend for FY23. In FY22, the lender paid a dividend of ₹2.85, while it declared 24 dividends since July, 2001. At the current market price, the dividend yield stands at 2.92%.

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