Bank of Baroda shares hit record high after strong Q2, analyst upgrades

Shares of state-run lender Bank of Baroda Ltd. (BoB) gained as much as 5% to hit an all-time high of ₹292.75 on Monday, November 3, in response to the lender's July-September quarter (Q2 FY26) results.

Brokerages have turned bullish on the stock after the earnings announcement.

HSBC maintained a 'Buy' rating and raised its price target to ₹340. Nomura upgraded the stock to 'Buy' and revised its price target higher to ₹320, while Investec also upgraded Bank of Baroda to 'Buy', increasing its target to ₹325 from ₹250 earlier.

HSBC said the bank's broad-based loan growth, expansion in net interest margin (NIM), and steady asset quality were key positives during the quarter.

The foreign brokerage expects operating performance to remain healthy, with potential upside from further improvements in asset quality. It has also raised its earnings estimates for FY26-FY28 by 5-7%.

CLSA, which has an 'Outperform' rating and a price target of ₹325, said that fee income and current account–savings account (CASA) performance were the weaker areas. Fee income remained flat year-on-year despite 12% loan growth, while the CASA ratio fell 90 basis points sequentially.

Nomura said Bank of Baroda's stock is trading at an attractive valuation of 0.9 times its projected book value per share for September 2027. The brokerage expects an average return on assets (ROA) of 1.0% and a return on equity (ROE) of 13.7% over FY26-FY28.

BoB Q2 update

Bank of Baroda surprised the Street with a 5 basis-point rise in NIM to 2.96%, against expectations of a decline due to the 100 basis-point repo rate cut in June. Asset quality also improved, leading to a sharp fall in credit costs (the cost of providing for potential bad loans).

BoB ₹cr	2QFY25	2QFY26	YoY
NII	11,637	11,954	2.7%
PPOP	9,477	7,576	-20.1%
Provisions	1,733	883	-49.0%
PAT	5,238	4,809	-8.2%

The bank, however, cautioned that provisions are expected to increase between 2027 and 2030 under the upcoming Expected Credit Loss (ECL) accounting framework.

The lender's net interest income (NII) rose 3% year-on-year, driven by prudent pricing, liability management, and income-tax refunds worth ₹750 crore during the quarter. However, pre-provision operating profit (PPOP) declined 20% year-on-year, as other expenses rose 7%.

On the positive side, provisions fell 47% quarter-on-quarter, and credit costs declined by 26 basis points, helped by high recoveries and upgrades along with low fresh slippages, particularly in its international business segment, which reported no new bad loans.

As a result, profit after tax (PAT) declined 8% year-on-year but grew 6% sequentially, while ROA improved by 4 basis points to 1.07%.

Bank of Baroda shares were trading 3.6% higher at ₹288.05, extending their year-to-date gains to about 20% in 2025.

With inputs from Gaurav Jawalkar