What does the recent 10% drop in BoB's stock signal for investors?

Synopsis

The recognition outgo accrued amid a higher slippage ratio owing to the micro, small, and mean enterprises (MSME) segment. The gross nonperforming plus (NPA) ratio continued to descent to a multi-quarter low. The stock of the retail conception successful the indebtedness portfolio roseate to 30% from 28% a twelvemonth agone portion the slope reported the highest ever nett net for the 4th and afloat year.

ET Intelligence Group: The banal of Bank of Baroda has mislaid 10% since Tuesday aft the slope reported higher sequential atrocious loans provisioning, little nett involvement income and sustained unit connected nett involvement borderline for the March quarter.

The recognition outgo accrued amid a higher slippage ratio owing to the micro, small, and mean enterprises (MSME) segment. The gross nonperforming plus (NPA) ratio continued to descent to a multi-quarter low. The stock of the retail conception successful the indebtedness portfolio roseate to 30% from 28% a twelvemonth agone portion the slope reported the highest ever nett net for the 4th and afloat year.

Over the past 2 months until Tuesday, the banal had gained 27% amid buoyancy successful the broader market. However, the bank's latest quarterly numbers person revealed accent connected its MSME publication narrowing the stock's return. MSME lending forms implicit 13% of the bank's gross home advances. At the extremity of the March 2025 quarter, the MSME publication accrued by 14.2% to ₹1,36,377 crore.

Fresh slippages from the MSME conception roseate to ₹1,473 crore successful the March 4th compared with ₹963 crore successful the erstwhile 4th and ₹1,138 crore a twelvemonth ago. Its publication to the full home slippages astatine ₹2,871 crore accrued to 51.3% from 40.1% a twelvemonth ago. Despite a spike successful MSME slippages, full slippages did not budge overmuch from the year-ago level of ₹2,841 crore helped by little inclination successful the agriculture and firm segments.

Agencies

In March quarter, the MSME indebtedness book's nonperforming assets astatine ₹11,242 crore formed 47.3% of the full home NPAs astatine ₹23,791 crore. In coming quarters, the inclination successful the MSME portfolio volition beryllium important and immoderate further summation volition adhd to the unit connected the stock.

The slope continued to amusement betterment successful plus quality. The gross NPA fell to 2.26% successful March 4th from 2.43% a 4th agone and 2.92% a twelvemonth ago. It was the 16th consecutive 4th of sequential autumn successful the GNPA.

The gross home advances roseate by 13.7% to ₹10.2 lakh crore. The slope expects to accelerate the indebtedness maturation by 1-2% successful existent fiscal twelvemonth driven by improving liquidity successful strategy and traction successful firm indebtedness publication driven by request from infrastructure and renewable vigor segments. Given the falling involvement complaint scenario, the slope expects 60% of wholesale deposits and astir 40% of the retail deposits to reprice successful six months. This should enactment NIMs successful 2nd fractional of fiscal year.

At Wednesday's closing terms of ₹224.6, the banal was traded astatine a price-book (P/B) aggregate of astir one, akin to the three-year mean valuation. While slope expects to turn indebtedness publication astatine a faster clip, the banal whitethorn stay scope bound successful the abbreviated word fixed unit connected the MSME publication and expected weakness successful NIM successful archetypal fractional of fiscal year.

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