Bank of Baroda's (BoB) stock surged over 3% on Friday, reflecting strong growth in its global business. The stock price jumped by 3.12% during intraday trading, reaching ₹252.70 per share after the bank announced a robust provisional business update for the second quarter of FY 2024-25. This increase in share value is a positive sign for those exploring share market investment opportunities in the banking sector.
The bank also revealed its intention to sell its Oman operations to Bank Dhofar, aligning with its broader strategy to rationalise foreign operations.
Global business performance in Q2 FY25
BoB reported a solid 10.23% year-on-year (YoY) growth in its global business, which stood at ₹25.06 trillion as of the end of Q2 FY25. This significant improvement in business figures has contributed to the stock price rise, reaffirming the bank's standing in the financial sector.
Global advances grew by 11.60% YoY, reaching ₹11.43 trillion. In particular, domestic advances saw a notable rise of 12.51%, amounting to ₹9.39 trillion by 30th September 2024. These figures underline the bank's steady expansion and solid performance across various sectors, both domestically and globally.
Deposits growth and retail performance
Bank of Baroda's global deposits surged by 9.11% YoY, hitting ₹13.63 trillion in Q2 FY25, compared to ₹12.49 trillion in the same quarter last year. Domestically, deposits increased by 7.4%, reaching ₹11.50 trillion, up from ₹10.74 trillion in Q2 FY24. The bank’s retail segment performed remarkably well, with domestic retail deposits growing by 19.9% YoY to ₹2.32 trillion.
These positive deposit figures not only reflect the bank's strong positioning but also provide an excellent avenue for those interested in share market investment. A growing deposit base often indicates a well-managed bank with increasing customer confidence, which is appealing to investors.
Oman operations sale
As part of its foreign operations rationalisation strategy, BoB has decided to divest its Oman operations. The total business in Oman is valued at 113.35 million Omani Rial (OMR), with a net worth of OMR 25.54 million. This move to streamline foreign operations is seen as a step towards greater efficiency, further strengthening the bank's focus on core markets.
Share price history and market performance
Bank of Baroda's share price has gained 7.7% year-to-date, underperforming the market in comparison to BSE Sensex, which rose by 14.6% in the same period. However, the bank's shares have appreciated by over 18.6% in the past year, indicating a recovery trend. In comparison, the BSE Sensex gained 27% over the same period.
Despite underperforming year-to-date, the bank’s steady growth in both global and domestic business is expected to provide long-term value for investors. With a market capitalisation of ₹1.30 trillion and a price-to-earnings (P/E) ratio of 6.97 times, BoB’s stock remains a solid prospect in the banking sector.
Conclusion
The recent 3% rise in Bank of Baroda’s stock price reflects investor confidence in its strong global business performance and strategic moves, like selling its Oman operations. For those considering share market investment, the bank’s solid fundamentals and consistent growth provide a promising outlook in the near future.
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