Nomura has downgraded Bank of Baroda to neutral from buy and cut target price to Rs 50 from Rs 110. Shares of Bank of Baroda ended up 0.9 per cent at Rs 52.05 on Thursday while the BSE Sensex closed 26.88 points down (-0.08 per cent) at 34,842.10.

Bank of Baroda, incorporated in 1911, has a market cap of Rs 24026.95 crore.


Investment Rationale

Bank of Baroda's fourth quarter results were marginally weaker operationally versus expectations, said Nomura. The brokerage has downgraded the stock due to muted expectations on growth, weak return on equity trajectory and higher risk on book dilution given weak capital levels. While the corporate cycle has peaked and provision cover at 69 per cent is healthy, the bank’s exposure towards vulnerable segments including MSME and NBFCs will keep credit cost elevated, said Nomura.

Quarterly Results

Source: ETmarkets.com

Financials

For the quarter ended March 31, 2020, the company reported consolidated interest income of Rs 13642.12 crore, down -2.03 per cent from last quarter Interest Income of Rs 13924.35 crore and up 43.12 per cent from last year same quarter interest income of Rs 9531.83 crore. The bank has reported net profit after tax of Rs 481.10 crore in the latest quarter.

Promoter/FII Holdings

Promoters held 71.60 per cent stake in the company as of March 31, 2020, while FIIs held 4.57 per cent, DIIs 13.95 per cent and public and other 9.88 per cent.