Bank of Baroda (BOB IN) Buy: Stable core earnings, stock trades attractively

Research evidence excerpt

Bank of Baroda (BOB IN) Buy: Stable core earnings, stock trades attractively

Equities ● Commercial Banks

11 May 2026

Takeaways from the post-earnings conference call

Growth and strategy

◆ Management expects loan growth of 12-14% y-o-y and deposits growth of 10-12% y-o-y

in FY27.

◆ The bank holds c22.5% of Statutory Liquidity Ratio (SLR). Management indicated that it will

be keeping a safety buffer of 3-3.5% of excess SLR at all point of time (18% regulatory limit).

◆ BOB indicated that out of the INR1.6trn MSME loans, 55-60% are working capital loans. It

believes that cINR120bn could be under the Emergency Credit Line Guarantee Scheme

(ECLGS) scheme.

◆ Management targets to raise INR60bn of Additional Tier 1 (AT1) and Tier 2 capital in FY27.

The bank is also keen to raise INR85bn of equity capital in the medium term up to FY28.

◆ BOB indicated that its outstanding loan exposure towards the Middle East is in the range of

INR500-600bn, though it is spread over multiple countries. The bank indicated that it does

not see any stress in its portfolio currently.

◆ BOB has adopted a new mortality table for arriving at the AS15 liability, which led to the

employee cost increasing by INR5.2bn in 4QFY26.

Margin and asset quality

◆ Deposits repricing is nearly over, and cost of deposits is unlikely to reduce much hereon.

Any NIM benefit will have to come from asset-side levers.

◆ BOB guided NIM of 2.75-2.95% in FY27. The range is to account for the volatility in interest

on income tax refund.

◆ Bulk deposits grew by 26% y-o-y / 14% q-o-q in 4QFY26 to manage liquidity. However,

management targets to reduce the reliance on bulk deposits and limit its exposure to 20%

of total deposits (19.4% in 4QFY26).

◆ Credit costs guidance for FY27 was maintained at less than 60bp.