Bank of Baroda to Raise ₹10,000 Crore via Bonds, Shares Dip

Shares of Bank of Baroda fell during early trade on Thursday following the lender’s announcement to raise ₹10,000 crore through long-term bonds. The funds will be used to finance infrastructure and affordable housing projects, as per the bank’s disclosure to the exchanges on Wednesday.

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On Wednesday, Bank of Baroda’s share price closed 2.07% lower at ₹250.65 on the BSE. On Thursday, the stock opened at ₹246.00, further below its closing price. This decline also led to a reduction in the bank’s market capitalization, which now stands at ₹1.29 lakh crore. The stock’s 52-week range shows a high of ₹298.45 on June 3, 2024, and a low of ₹214.85 on November 21, 2023.

The company stated in a regulatory filing, “...Board of directors of Bank of Baroda at its meeting held today i.e 18.12.2024 interalia considered & approved raising of long-term bonds for the financing of infrastructure and affordable housing aggregating to total size up to Rs 10,000 crore in single or multiple tranches during FY 2024-25 and beyond if found feasible.”

This move comes as part of the bank’s strategy to tap into alternative funding sources, particularly amidst slower deposit growth in the banking sector. The long-term bonds will be issued in one or more tranches throughout the current financial year and beyond, depending on market conditions and feasibility.

In the ongoing financial year, Bank of Baroda has already raised ₹10,000 crore through two previous issuances of infrastructure bonds. The current approval by the board signals the bank’s continued focus on leveraging bond markets to support critical projects while meeting its financial objectives.

In Q2 FY25, Bank of Baroda reported a net profit of ₹5,238 crore, up 23.2% from ₹4,253 crore in the same quarter last year. Net interest income increased 7.3% year on year to ₹11,622 crore, while non-interest income increased 24.2% to ₹5,181 crore.

In Conclusion

As the bank navigates changing market dynamics, this bond issuance may strengthen its resource base while addressing the evolving funding needs of key sectors.

The downturn may also reflect broader market sentiment, as key stock indices faced a decline on Thursday. Going forward, investors and analysts will closely monitor how effectively this funding initiative translates into growth and impacts the bank’s performance in the upcoming quarters.