On Wednesday, the Reserve Bank of India (RBI) issued a directive that effectively halted new customer sign-ups via the Bank of Baroda’s BoB World app. This regulatory intervention has had an immediate impact on the bank’s shares, resulting in a 4% decline. The central bank’s decision is linked to concerns regarding the BoB World app’s functionality, prompting the bank to initiate corrective measures to minimize disruption for its existing customers.
In response to these challenges, Bank of Baroda’s board is actively exploring the possibility of raising Rs 10,000 crore through long-term bonds, with the intent of channeling these funds into infrastructure and affordable housing projects. These developments have garnered close scrutiny from investors who are keenly observing the bank’s stock in light of these transformative changes.
Adding another layer of complexity, on October 9, 2023, the Central Government appointed Lal Singh as the Executive Director of Bank of Baroda. This leadership shift is a factor that has been influencing investor sentiment regarding the bank’s stock.
Amidst these significant developments, Citigroup (NYSE:C) continues to endorse a ‘buy’ rating for Bank of Baroda’s shares, valuing them at Rs 245/share. This stands in contrast to HSBC’s recent decision to downgrade the stock to a ‘hold’ recommendation with a valuation of Rs 220/share. Motilal Oswal Securities, on the other hand, has set a target price of Rs 240/share, emphasizing that while the RBI’s order has impacted digital sourcing for personal loans, this segment represents just 2% of the bank’s total advances.
In terms of performance, Bank of Baroda has demonstrated remarkable resilience in a challenging market environment, with a six-month return of 25.2%, outperforming the Nifty Bank index, which recorded an 11.10% return over the same period. These figures underscore the bank’s ability to navigate turbulent waters effectively.
