Bank of Baroda Share Price Falls After $600 Million NMC Settlement; KSL Research Retains 'ADD', Lowers FY27 Earnings Estimates

Bank of Baroda share price traded lower on Friday after the lender agreed to a $600 million out-of-court settlement with the administrators of NMC Healthcare, bringing one of its longest-running cross-border legal disputes to a close. As of 3:23 pm, the stock was down 3.07% at ₹252.25 on the NSE as investors assessed the one-time financial impact of the settlement.

The dispute dates back to the collapse of UAE-based NMC Healthcare in 2020 after the discovery of billions of dollars of undisclosed debt. Bank of Baroda said the settlement resolves all claims involving NMC Health PLC, NMC Healthcare Ltd and NMC Holding Ltd without any admission of liability or wrongdoing. The agreed amount has already been paid through its Abu Dhabi branch, while proceedings in Abu Dhabi have been discontinued and those in England are being withdrawn.

KSL Research has retained its 'ADD' rating on the stock with a fair value of ₹285, while lowering its FY27 earnings estimates by 15% to reflect the settlement. Based on the prevailing market price, the fair value implies an upside of about 13%. The one-time settlement is expected to weigh on profitability this year, although the bank's capital position remains comfortable, supported by a Common Equity Tier-1 (CET-1) ratio of 13.2%.

Although the settlement removes a long-standing legal overhang, the note says it is likely to result in a one-time earnings hit as the contingent liability may not have been fully provided for earlier. It has therefore lowered FY27 earnings estimates by 15% and now expects return on equity (RoE) to remain below 10% this year.

The settlement follows after Bank of Baroda reported a strong March quarter. Net profit rose 11.3% year-on-year to ₹5,615.7 crore, while net interest income increased 8.7% to ₹12,493.7 crore, supported by healthy business growth and improving asset quality.

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Despite lowering earnings estimates, the note continues to view the issue as a legacy corporate non-performing loan (NPL) rather than a broader concern for the banking sector. It has retained its 'ADD' rating, saying valuations remain undemanding, although any meaningful re-rating will depend on a recovery in profitability.