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    Bank of Baroda shares fall over 5% after lender posts loss in Q4; should you buy?

    Bank of Baroda shares fall over 5% after lender posts loss in Q4; should you buy?

    Bank of Baroda shares fall over 5% after lender posts loss in Q4; should you buy?
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    By Pranati Deva   IST (Published)

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    The share price of state-owned Bank of Baroda fell as much as 5.6 percent to its day's low of Rs 79.15 per share on the BSE after the lender posted a loss in the March quarter.

    The share price of state-owned Bank of Baroda fell over 5 percent on Monday after the lender posted a loss in the March quarter against expectations of profit due to higher tax expenses and a rise in bad loan provisions.
    It reported a standalone net loss of Rs 1,046.50 crore for the March quarter versus a net profit of Rs 506.59 crore in the year-ago quarter. For the fiscal year 2020-21, the bank reported a net profit of Rs 828.95 crore, up 52 percent from Rs 546.18 crore.
    The stock fell as much as 5.6 percent to its day's low of Rs 79.15 per share on the BSE.
    "Bank moved to a new tax structure thus reporting a loss of Rs 1,047 crore because of DTA (deferred tax asset) reversal. Excluding the impact of the change in the tax regime, the bank would have reported a profit after tax of Rs 2,267 crore in Q4FY21 and Rs 4,143 crore in FY21," it said in a release.
    The tax cost for the March quarter was at Rs 3,726.07 crore against a tax writeback of Rs 2,229.85 crore in the corresponding quarter of last fiscal.
    Net interest income was up 4.5 percent YoY to Rs 7,106.62 crore in Q4FY21. The bank’s asset quality condition improved, with gross non-performing asset ratio falling to 8.87 percent in Q4 versus 9.63 percent in the previous quarter (QoQ).
    Brokerages were mixed on the stock after the results. While JPMorgan and CLSA were bullish, Credit Suisse ad Morgan Stanley remained neutral.
    As per JPMorgan, the asset quality print was positive. It believes slippages will continue to trend down in FY22 as well. It has an 'overweight' call and a target of Rs 110 for the stock.
    CLSA said that the March quarter performance of the lender was better than the brokerage's expectations. It has a target of Rs 130 per share for the stock with a 'buy' rating.
    Credit Suisse said that the growth continued to lag for the lender, while asset quality stress was broadly contained.
    Credit Suisse raised the FY22 EPS estimate by 8 percent on higher recoveries. It has a 'neutral' rating on the stock with a target of Rs 75 per share.
    Morgan Stanley is 'equal-weight' on the stock with a target at Rs 100 per share.
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