Bank shares are in focus after the lenders, Bank of Baroda and IDFC First Bank, reported their earnings for the first quarter of FY27.
The IDFC First Bank share rallied nearly 10% to the day’s high of Rs 88.76 on the NSE, while Bank of Baroda shares are flat, up 0.5% to a high of Rs 247.70.
IDFC First Bank clocks steady improvement in Q1 results
Nuvama Institutional Equities upgraded the banking stock to a ‘Buy’ rating from ‘Hold’ and raised the price target to Rs 95 from Rs 67.3, implying an upside of 17.2%.
Factoring in Q1 beat and a steady improvement in operational expenditure and credit cost, Nuvama raised earnings estimates and reckoned the bank shall deliver 1% RoA in FY27, up from 0.4% in FY26 and then at 1.2–1.4% over FY28-29.
The bank’s deposit growth bounced back to 17.7% YoY and 6% QoQ after facing the Haryana fraud-related issue in Q4, and management indicates that institutional deposits are holding up well.
The bank’s net profit more than doubled year-on-year (YoY) to Rs 1,075 crore in the first quarter of FY27.
Its Net Interest Margin (NIM) improved to 6% YoY in Q1FY27 from 5.71% a year ago, up 25 basis points YoY, while its Net Interest Income (NII) surged to Rs 5,972 crore in Q1FY26, up 21.1% YoY from Rs 4,933 crore in Q1FY26.
The bank’s loans and advances increased 20.6% YoY to Rs 3,05,370 crore, mainly on the back of mortgage, vehicle, corporate and consumer loans, the bank said.
The capital adequacy ratio came in at 15.05%.
Retail, agri and micro, small and medium enterprises book increased to Rs 2,41,118 crore from Rs 2,03,954 crore a year ago, up 18.2% YoY. Wholesale book increased to Rs 64,252 crore from Rs 49,279 crore a year ago, up 30% YoY.
Bank of Baroda Q1FY27 net profit under pressure
Following the quarterly earnings, JM Financial slashed the price target to Rs 270 from Rs 290. Bank of Baroda posted a mixed Q1FY27 with net profit plunging 72% YoY to Rs 1,280 crore due to an exceptional charge of Rs 5,700 crore pertaining to the NMC Health litigation settlement.
Excluding this, net profit would have grown 22% YoY, translating to an RoA of 1.1%. NII grew 10% YoY, which was below the brokerage’s 3% estimates as reported NIM contracted 12 bps QoQ amid lower asset yields.
Operating performance was further weighed down by weak core fee income, declining 22% YoY, although sharply lower provisions – aided by release of standard-asset provisions – supported profitability.
Bank of Baroda posted a fall of 72% YoY in net profit for the first quarter of FY27 to Rs 1,278 crore, after the lender absorbed the impact of the out-of-court settlement of about Rs 5,700 crore to the joint administrators of United Arab Emirates-based NMC Health.
India’s second-largest public sector lender reported a net profit of Rs 4,541 crore in the same quarter a year ago.
However, the lender posted a 9.5% growth in net interest income for Q1 FY27 to Rs 12,524 crore.
The bank’s net non-performing asset (NNPA) came down by 10 basis points to 0.5% for the June quarter from 0.6%, while the gross NPA (GNPA) came in at 1.99%, as compared to 2.24 percent in the first quarter of FY26.
The lender’s capital adequacy ratio was at 16.31% for the first quarter, as compared to 17.61%, a whopping 130 basis point drop.
Conclusion
Overall, while IDFC First Bank reported strong numbers, Bank of Baroda posted a quiet quarter. Improvement in asset quality is what is driving the share price gains across the banking sector.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.
