Big Upside Ahead? Bank of Baroda Rallies after strong Q4 results; here's why brokerages still bullish on PSU bank stock

Bank of Baroda Share Price: Shares of Bank of Baroda gained more than 2 per cent on Monday after the state-run lender reported a healthy rise in fourth-quarter profit and improvement in asset quality metrics. The stock climbed to an intraday high of Rs 270 on the BSE before closing at Rs 266.05 apiece, up 0.81 per cent.

Q4 Profit Rises 11 per cent, NII growth remains strong

Bank of Baroda posted a consolidated net profit of Rs 5,616 crore for Q4FY26, registering an 11.2 per cent increase from Rs 5,048 crore reported in the same quarter last year.

The lender’s net interest income (NII) rose 9 per cent year-on-year to Rs 12,494 crore, compared with Rs 11,494 crore in Q4FY25, driven by steady loan growth and healthy core banking operations.

However, non-interest income declined 16 per cent during the quarter under review to Rs 3,967 crore from Rs 4,735 crore reported a year ago.

Asset Quality improves further

The PSU bank continued to strengthen its balance sheet during the March quarter, with gross non-performing assets (GNPAs) declining 37 basis points year-on-year to 1.89 per cent from 2.26 per cent.

Net NPAs also improved sharply to 0.45 per cent from 0.58 per cent in the corresponding period last year, reflecting better recovery and lower stress in the loan book.

BoFA sees strong growth momentum

Bank of America Securities maintained a “Buy” rating on Bank of Baroda with a target price of Rs 315. The brokerage said the lender’s profit after tax beat estimates, aided by strong loan growth, margin expansion and lower operating expenses, which offset weaker treasury income and higher credit costs.

BoFA noted that the improvement in net interest margins (NIMs) was supported by better investment yields and income tax refund-related income. It also highlighted that higher provisions were largely due to 43 basis points of floating provisions created during the quarter.

The brokerage added that management has guided for 12–14 per cent loan growth in FY27, NIMs in the range of 2.75–2.95 per cent and credit costs below 60 basis points, while reiterating return on assets (RoA) guidance of above 1 per cent.

CLSA flags one-Off gains, retains ‘Accumulate’

CLSA maintained its “Accumulate” rating on the stock while trimming the target price to Rs 335. The brokerage said Bank of Baroda’s fourth-quarter pre-tax profit was broadly in line with estimates but included several one-off gains such as interest on income tax refunds, employee provision reversals and floating provisions.

CLSA said the bank’s core operational performance remained mixed despite healthy loan growth of 16.5 per cent year-on-year, which outpaced many peers. Deposit growth improved marginally to 12 per cent, while CASA ratio saw slight sequential improvement.

The brokerage added that while reported NIMs improved by 10 basis points sequentially, the expansion was largely driven by income tax refund-related interest income. Excluding this, core margins would have declined due to lower loan yields and a rise in deposit costs.

Citi maintains ‘Buy’, cuts target price

Citigroup retained its “Buy” rating on Bank of Baroda while lowering the target price to Rs 340 from Rs 360, implying an upside potential of nearly 29 per cent from current levels.

The brokerage said Q4 profit was materially aided by one-off items including Rs 12.9 billion from income tax refunds, Rs 14.85 billion in recoveries from written-off accounts, dividend income and reversal of retirement benefit provisions.

Citi said reported NIMs expanded 10 basis points quarter-on-quarter to 2.89 per cent, but the increase was largely due to tax refund income. Adjusted for this, yields on advances contracted while cost of deposits edged higher, reflecting persistent pressure on core margins.

The brokerage also highlighted that the bank created floating provisions worth Rs 15 billion to strengthen buffers against global macroeconomic uncertainties.

JP Morgan raises target price

JPMorgan Chase maintained its “Overweight” stance on the stock and raised the target price to Rs 335 from Rs 325.

The brokerage said Bank of Baroda’s core operating performance in Q4FY26 came in ahead of expectations, driven by stronger margins, better recoveries and lower operating expenses. NII, pre-provision operating profit and net profit exceeded estimates by 2 per cent, 11 per cent and 6 per cent, respectively.

JP Morgan highlighted that retail, agriculture and MSME segments remained the key growth drivers, with their share in domestic advances rising to 61 per cent. It added that the bank continues to focus on granular and margin-accretive growth in these segments.

Jefferies remains cautious on deposit mix

Jefferies Financial Group maintained a “Hold” rating on the stock while cutting the target price to Rs 295 from Rs 316.
The brokerage noted that the bank’s Q4 profit exceeded estimates and included several non-core gains, some of which were utilised to create floating provisions. It added that loan growth remained healthy at 16 per cent, while asset quality and core credit costs stayed stable.

However, Jefferies flagged concerns around the lender’s loan-to-deposit ratio of 83 per cent and relatively higher dependence on bulk deposits compared with PSU banking peers.

Motilal Oswal, Elara also positive

Motilal Oswal Financial Services maintained a “Neutral” rating with a target price of Rs 300, while Elara Capital retained its “Accumulate” rating with a revised target price of Rs 314.

Both brokerages acknowledged the bank’s stable operational performance and improving asset quality, although they remained watchful of margin pressures and the impact of liquidity conditions on future profitability.

Goldman Sachs adds bank to ‘Alpha’ basket

Separately, Goldman Sachs included Bank of Baroda in its list of 12 “alpha” ideas — a basket of large and liquid stocks where foreign investor ownership remains relatively low and valuations appear attractive.

The global brokerage noted that the PSU lender is trading at nearly seven times forward earnings, while foreign institutional investors currently hold around 27 per cent of the bank’s free float.