UBS has raised its price target for Bank of Baroda (BOB) to INR320.00 from INR280.00, maintaining a Buy rating, following the bank's stronger-than-expected quarterly results. The bank reported a profit after tax of Rs48.1 billion, exceeding UBS estimates, driven by higher net interest income and reduced provisions, with net interest margins expanding to 2.96% and gross slippages moderating significantly to 0.91%. UBS projects stable net interest margins, despite an anticipated repo rate cut, and estimates a return on assets of approximately 0.9% and return on equity of 13% for fiscal years 2026-2027.
UBS has raised its price target on Bank of Baroda (BOB) to INR320.00 from INR280.00, maintaining a Buy rating, following the bank's better-than-expected quarterly results. The bank reported a profit after tax of Rs48.1 billion, exceeding UBS estimates, primarily driven by higher net interest income (NII) and lower provisions. NII increased 3% year-over-year, beating expectations by 6%. Operational metrics showed significant improvement, with net interest margins expanding 5 basis points quarter-over-quarter to 2.96%. Gross slippages (annualized) moderated to 0.91%, a 16 basis point year-over-year and 25 basis point quarter-over-quarter reduction, indicating strengthening asset quality. Credit costs also fell to approximately 40 basis points, down from 66 basis points in the prior quarter, despite additional floating provisions. UBS projects stable net interest margins for BOB, with only a slight moderation anticipated in the fourth quarter due to a potential 25 basis point repo rate cut. The firm estimates a return on assets of approximately 0.9% and a return on equity of 13% for fiscal years 2026-2027, reinforcing a positive long-term financial outlook.
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