Bank of Baroda shares tank 10% after third quarter results2 min read . Updated: 13 Feb 2017, 06:13 PM IST
Bank of Baroda stock has been downgraded by the Brokerage firms such as Antique Stock Broking, PhillipCapital, Ambit Capital and Elara Capital after Q3 results
Mumbai: Shares of Bank of Baroda (BoB) on Monday fell 10.3%, its steepest fall in two year, after most of the brokerages downgraded the stock as non-performing assets (NPAs) continued to mount amid fall in loan growth.
The scrip touched a low of ₹ 68 a share and fell as much as 10.7%. BoB closed at ₹ 168.75 on Bombay Stock Exchange, or BSE—down 10.3%, its biggest fall since January 2015, from its previous close while India’s benchmark Sensex Index rose 0.06% to closed at 28351.62 points.
The scrip touched a low of ₹ 68.75 a share. At 1.24pm, BoB was trading at ₹ 171.50 on Bombay Stock Exchange, or BSE—down 8.8% from its previous close while India’s benchmark Sensex Index fell 0.18% to 28281.87 points.
The scrip closed down 10.26% at Rs168.75 at BSE.
Brokerage firms like Antique Stock Broking, PhillipCapital, Ambit Capital, Elara Capital have downgraded the stock.
Net profit for the third quarter stood at Rs252.67 crore compared with a loss of Rs3,342.04 crore a year earlier.
According to estimates by 20 Bloomberg analysts, BoB was expected to post a net profit of Rs636.50 crore.
Net interest income (NII), or the core income a bank earns by giving loans, rose 15.85% to Rs3,134.36 crore in the December quarter from Rs2,705.34 crore last year. Provisions and contingencies increased 15.79% to Rs2,079.50 crore in the third quarter from Rs1,795.84 crore from the previous quarter.
“Its loan book may remain subdued, as it trims non-profitable businesses like buyer’s credit and focuses on profitability. Having recognized stressed assets, its focus is on resolution of bad loans. We are not sanguine on a quick large recovery, as most of these loans would require a higher haircut, for which BOo is not adequately covered", said PhillipCapital in a report to its investors.
Slippages for the quarter stood at Rs4,140 crore against Rs2,690 crore a year ago. Loan growth continued to remain under pressure which fell 9% from a year ago as loans worth Rs1,000 crore linked to FCNR (B) deposits matured.
As a result, overseas long book declined 20% year on year. Due to the demonetisation drive, retail and small and medium enterprises loans fell 1% and 8%, respectively, year on year.
“Multiple headwinds on credit book expansion, loans write-downs and likely equity dilution overweigh positive developments on CASA deposit composition and likely stability in margins. We estimate, the bank would post return on assets at 70 basis points and RoAE at 12% in FY18," said Elara Securities in a note to its investors.
Loan write off pace for the quarter was higher at ₹ ,800 crore from ₹ 220 crore a quarter ago. On the loan restructuring front, incremental restructuring of ₹ 540 crore led to higher standard asset provision.
PhillipCapital has downgraded the stock to “Neutral" from “Buy" with a revised price target of ₹ 90 a share from ₹ 200 earlier. Ambit Capital has turned sellers with unchanged target price of ₹ 77 a share, Antique Stock Broking has downgraded the stock to “Hold" from “Buy" and kept its target price at ₹ 175 a share—down 7% from its earlier. Elara Securites has re-iterate sell rating with unchanged target price at ₹ 151 a share. Quant Broking Pvt Ltd has downgraded the stock to “Accumulate" from “Buy" with target price of ₹ 195 a share.
Of the analysts covering the stock, 21 have a “Buy" rating, 17 have a “Hold" rating, while 11 have a “Sell" rating, shows Bloomberg data.