Emkay raises Bank of Baroda target to ₹350 on strong FY26 growth outlook

Analysts at Emkay Global Financial Services have raised Bank of Baroda's share price target to ₹350 with a 'Buy' rating, citing 11-13% credit growth outlook, stable margins, and strong asset quality

Bank of Baroda share price today

  Emkay Global Financial Services has reiterated its positive stance on Bank of Baroda (BoB), while raising its share price target on the stock, as the management shared an optimistic outlook on the bank’s growth, margins, and asset quality.

 

The brokerage increased Bank of Baroda's share price target to ₹350, up from ₹330, valuing the stock at 0.9x FY27E adjusted book value. It retained its 'Buy' rating on the stock.

 

"We remain positive on PSBs in general, as also on BoB, given its healthy return ratios, capital buffer, stable management team, and reasonable valuations," Emkay said.

 

 

On thee BSE, Bank of Baroda shares were largely flat, rising 0.6 per cent in the intraday trade. The stock erased gains to trade 0.05 per cent lower at 10:54 AM as against a 0.1 per cent rise in the benchmark BSE Sensex index.

 

Bank of Baroda credit growth outlook

 

The brokerage's upbeat stance on the public sector bank comes from the management's reiteration that BoB’s credit growth is expected to remain in the range of 11-13 per cent in financial year 2025-26 (FY26), with further acceleration likely in FY27, supported by steady momentum in the retail, MSME, and corporate segments.

 

Credit demand growth, the management said, would be driven by sectors such as renewable energy (particularly wind), data centers, infrastructure, and mortgages and vehicle loans.

 

"A key driver continues to be the bank's sizable overseas portfolio, which is benefiting from rupee depreciation. While corporate credit growth was relatively soft in the second quarter (Q2FY26), the management expects a pickup in the second half of the year," Emkay Global noted.

 

Bank of Baroda posted an overall loan growth of 12 per cent in the July-September quarter.

 

Bank of Baroda margin outlook

 

On margins, the management expects core net interest margin (NIM) to remain stable at around 2.8 per cent, despite recent rate cuts and a gradual shift towards overseas loans.

 

Including the benefit of interest on income-tax refunds and healthy recoveries, overall NIM is guided in the range of 2.85–3.0 per cent in the second half of the year and for FY26.

 

Improved asset quality

Emkay Global noted that a strong asset quality remains one of the key strengths of Bank of Baroda. The lender's gross non-performing asset (GNPA) ratio has improved to 2.2 per cent as of Q2FY26, among the best in the PSB space, driven by contained slippages and strong recoveries.

 

The public sector bank also has a large written-off recovery pool of about ₹62,000 crore, equivalent to 3.5 per cent of average assets, and expects recoveries to run at ₹700–1,000 crore per quarter over the next two years.

 

The management also expects provisions related to projects under implementation and the MSME moratorium to be limited in the near term.

 

On the transition to the expected credit loss (ECL) framework, Emkay said the management estimates a potential impact of around 75 basis points on CET-1 capital, which could be diluted if the RBI softens certain draft norms.

 

"To mitigate this, BoB has already built floating provisions of ₹1,000 crore, or 0.1 per cent of loans," the brokerage noted.

 

Public sector banks consolidation ahead?

Bank of Baroda's management has clarified that public sector banks are not currently involved in discussions on PSB consolidation, adding that any future consolidation is likely to be less disruptive given the sector's improved health.

     

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