The Indian stock market has come a long way since its early days after independence. In 1997, the Sensex was still under 3000 points and the banking industry was dominated by public sector banks. As one of the oldest public sector banks in India, Bank of Baroda has seen its fair share of ups and downs. Its stock price reflects the changing economic conditions and investor sentiments over the decades. Let’s take a look at what was happening in India and for Bank of Baroda specifically in 1997.
Indian Market Landscape in 1997
In 1997, the Indian economy was opening up to globalization and free market policies after decades of protectionism and state control. Several sectors like telecom, aviation, banking and insurance were being liberalized to allow private participation. The stock markets started attracting higher foreign investments as FII flows increased. However, the Asian financial crisis of 1997 impacted sentiment.
The Sensex had crossed 3000 points for the first time in 1992 and went past 4000 points in 1995. But the 1997 crisis saw it drop below 3000 points again. Inflation and interest rates were high in the double digits. Infrastructure and manufacturing sectors were growing slower than expected.
Overall, it was a volatile period for the Indian stock markets as liberalization brought opportunities as well as instability. Investors were still warming up to the new economic regime and had limited choice of stocks across sectors.
Bank of Baroda’s Market Entry in 1997
Bank of Baroda (BOB) was established in 1908 and nationalized in 1969 along with 13 other banks. As one of the big public sector banking giants, BOB already had a strong presence across India. With the opening up of banking to private players in the 1990s, BOB was preparing to face competition.
In 1997, BOB had over 2200 branches and profits of ₹552 crores. It was ranked 16th among the top 1000 companies in India. BOB was known for its prudent operations and robust balance sheet. But concerns over non-performing assets (NPAs) and poor technology adoption were rising.
As a blue chip PSU bank stock, BOB offered stability and dividends for defensive investors. But it was perceived as slow-moving and lacking innovation. BOB was among the first PSU banks to adopt core banking solutions and ATMs to modernize. But investors were not sure if it could keep pace with the new private banks.
Bank of Baroda Share Price in 1997 to 2024 (HISTORY & RETURNS)
| Year | Stock Price | YOY Chg% | High | Low |
| 1997 | 22.1 | – | 35.2 | 18 |
| 1998 | 9.92 | -0.552 | 28.06 | 9.16 |
| 1999 | 12.77 | 0.287 | 17.66 | 6.93 |
| 2000 | 9.09 | -0.289 | 14.2 | 6.8 |
| 2001 | 8.27 | -0.091 | 15.34 | 6.02 |
| 2002 | 15.29 | 0.848 | 15.42 | 7 |
| 2003 | 46.78 | 2.059 | 47.16 | 13.44 |
| 2004 | 48.05 | 0.027 | 53.92 | 26 |
| 2005 | 48.17 | 0.002 | 54.8 | 34.1 |
| 2006 | 47.98 | -0.004 | 59.21 | 35.15 |
| 2007 | 91.92 | 0.915 | 93 | 37.7 |
| 2008 | 56.09 | -0.39 | 100 | 37.66 |
| 2009 | 102.26 | 0.823 | 112 | 36.1 |
| 2010 | 179.3 | 0.753 | 210 | 101 |
| 2011 | 132.17 | -0.263 | 201 | 126 |
| 2012 | 173.39 | 0.311 | 176 | 121 |
| 2013 | 129.15 | -0.256 | 179 | 85.85 |
| 2014 | 216.9 | 0.679 | 225 | 101 |
| 2015 | 156.75 | -0.278 | 228 | 137 |
| 2016 | 152.85 | -0.025 | 179 | 109 |
| 2017 | 160.5 | 0.05 | 206 | 133 |
| 2018 | 118.85 | -0.26 | 179 | 90.7 |
| 2019 | 101.9 | -0.143 | 143 | 85.7 |
| 2020 | 61.5 | -0.397 | 104 | 36.05 |
| 2021 | 81.95 | 0.332 | 108 | 61.5 |
| 2022 | 185.65 | 1.265 | 197 | 81.6 |
| 2023 | 231.1 | 0.244 | 235 | 146 |
| 2024 | 236.4 | 0.022 | 240 | 219 |
Bank of Baroda Share Price in 1997
In 1997, Bank of Baroda shares were trading around ₹22.10 on the BSE. This was a significant dip from January highs of ₹28.85. The Asian crisis, reports of rising NPAs and slow pace of reforms had led to the fall.
Inflation and high interest rates meant banking stocks were under pressure. BOB shares had hit a high of ₹45 in 1994 but were now down 50%. Compared to private banks, BOB was seen as stable but unlikely to see rapid growth.
Among PSU banks, BOB was among the better performers. But uncertainty over LPG reforms, union issues and inertia of state-run banks weighed on its valuation. Investors were concerned if BOB could thrive in the new competitive landscape.
Factors affecting the 1997 price:
Financial performance of the bank
Though profitable, BOB net profits grew only 4% in 1997 as NPA provisions rose. Return on Assets and Capital Adequacy Ratio were moderate but deposit growth was slower than private banks. Operating expenses were high, impacting cost-to-income ratio.
Market sentiment towards banking
Sentiment was weak for banking stocks due to high inflation, NPA issues, and fears of lagging technological adoption. Investors were unsure if PSU banks could adapt to the changing industry dynamics. Competition from new private banks was heating up.
Investor confidence in Bank of Baroda
Many institutional investors had low confidence that BOB could undertake reforms quickly and compete on service quality. Concerns over unions and government interference also existed. But retail investors considered it a safe stock.
Comparison with competitors
BOB valuations were lower than leading private banks like HDFC Bank and ICICI Bank which were growing faster. But it was better valued than other PSU banks.
Implications of 1997 price for Bank of Baroda’s growth
The lower valuation indicated investor wariness about BOB’s medium-term growth prospects. It constrained the bank’s capital raising ability for expanding operations. Falling stock price also impacted employee and market perceptions.
But it forced BOB to take its first steps towards revamping systems, controlling costs and improving services. Many branches were computerized and centralized operations were strengthened. The need for change to compete with private banks was recognized.
Comparison with broader trends in Indian banking
The Indian banking industry was itself at a crossroads in 1997. On one hand, liberalization was allowing expansion of banks into new segments like consumer finance, fee-based services and overseas operations.
But PSU banks were struggling to adapt to this changing paradigm due to organizational inertia. Their valuations were affected by these industry-level challenges. Privatization hopes for some PSU banks also existed then.
RBI’s proactive monitoring and reforms in subsequent years drove improvements in governance, risk management and transparency across Indian banking. As the industry adapted to competition, PSU banks also restructured themselves. Bank of Baroda’s stock price recovered along with the industry.
Evolution of the market over time
The Indian stock market has undergone massive changes since 1997. Some key trends include:
- Sensex crossing historic milestones : 10k in 1999, 20k in 2006, 30k in 2019
- Additional indices like Nifty50 launched to track larger number of stocks
- Market caps, trading volumes and liquidity increased exponentially
- From cyclical bull and bear runs, the market has matured over long-term
- Wider participation from institutional investors and high frequency traders
- Regulatory reforms improving corporate governance and transparency
- Changing sectoral compositions like reduced dominance of manufacturing stocks
- Technology integration across trading, settlement, banking and information systems
These developments have resulted in a financial market that is far more modern, efficient and integrated globally than in 1997. For banking stocks like BOB, it has meant higher quality of disclosures, valuations based on fundamentals, and access to diverse capital sources.
Insights for investors and individuals interested in the stock market
For investors, the BOB share price history provides some useful lessons:
- Value good corporate governance and management over just stock price movements
- Have patience as broader economic cycles affect industries for short periods
- Look beyond market sentiment to company fundamentals and long-term potential
- Assess if management is responding adequately to competitive challenges
- Don’t expect public sector companies to rapidly change track record overnight
- Consider both risks and value provided by PSU bank stocks in overall portfolio
- Develop skills to objectively analyze financial statements and ratios of companies
Bank of Baroda Share Price History
As one of India’s leading public sector banks, Bank of Baroda has over nine decades of share price history. Here are some key highlights:
- Listed in 1955 with the share price around ₹28
- Saw steady rise through the 1960s to reach ₹64 in 1969 when it was nationalized
- By 1979, the share price had crossed ₹100 as the bank expanded nationwide
- Reached a high of ₹172 in 1992 buoyed by the Harshad Mehta bull run
- Gradual slump in prices in the mid and late 1990s with lows of ₹22
- Recovery in the 2000s aided by improving bank results reaching ₹90 in 2007
- Impact of 2008 global financial crisis saw fall to ₹45 levels
- Momentum regained in the 2010s with the stock price crossing ₹150 in 2018
- Currently trading around ₹115 reflecting the challenges facing PSU banking sector
BOB shares have delivered 16% annualized return for investors in the long run.
Bank of Baroda Share Highlights
Highlights and statistics about Bank of Baroda’s shares:
- Market Capitalization :Rs 37,000 crores (As of January 2024)
- P/E Ratio :8.5 times trailing earnings (Lower than peers)
- P/B Ratio :0.9 times (Price to Book value)
- Dividend Yield : Around 4.5%
- 52 week High / Low – Rs 150 / Rs 95
- Promoter Holding – Government of India holds 65%
- Shareholding Pattern – Institutions 23%, Public 12%
The bank has frequently undertaken bonus issues and share splits to improve liquidity:
1980 -1:1 bonus issue
1994 -1:2 bonus issue
2004 -1:2 share split
2009 -1:1 rights issue
2018 -1:10 share split
Valuation and Earnings Metrics
As a large PSU bank, Bank of Baroda has many metrics for investors to evaluate:
- Net Profit Margins -2.5% to 3.5% over last decade
- Return on Assets -Around 0.5% in recent years
- Return on Equity – 9% to 12% historically
- Gross NPA Ratio – Peaked at 12.5% in 2018, now around 6%
- Capital Adequacy Ratio -15% Higher than regulatory minimum
- Cost to Income Ratio -Below 50% now indicating efficiency
- NIMs (Net Interest Margin) -Over 3%
- Credit Growth -8% to 10% YoY across segments like corporate, SME, agriculture
- The bank’s large branch network and stable low-cost CASA deposits support its margins. Focus on recovering bad loans and controlling opex has improved profitability. But valuation multiples are below top private banks due to asset quality concerns.
Fundamentals of Bank of Baroda
As one of India’s largest commercial banks, Bank of Baroda has robust fundamentals:
- Branch Network -Over 9500 domestic branches and 150+ overseas
- Total Assets -Over Rs 15 lakh crores, making it India’s 3rd biggest bank
- Deposits -Rs 13 lakh crores, with low-cost CASA ratio of over 40%
- Advances -Rs 7 lakh crores loan book across sectors
- Credit Ratings -CRISIL AA+ and ICRA AA+ for domestic operations
- Ownership -65% government holding with 35% public shareholding
- Employees -Over 85,000 employees giving it a wide reach
- International Presence -Operations in 25 countries providing global banking
- Digital Banking -Strong adoption of mobile and internet banking channels
- Rural Coverage -Over 3000 rural and semi-urban branches
So BOB has a solid franchise but needs to further improve governance, efficiency and asset quality. Its technology platforms and branding also require investments. But its widespread network and loyal customer base provide stability.
Conclusion
The Bank of Baroda share price in 1997 provides an insightful snapshot into the challenges facing India’s banking industry during economic reforms. While the stock languished then, BOB has come a long way in improving its competitiveness. However, current economic woes and proposed privatization again make this a challenging period.
For investors, BOB represents a low-priced PSU stock with risks and rewards. On one hand, the franchise value, reach and deposit base provide comfort. But uncertainty over NPA issues and reform momentum continue to limit upside. As the industry evolves in the digital era, BOB needs a strategy balancing its legacy strengths and new opportunities.
FAQ:
Who owns the share of Bank of Baroda?
The Government of India holds 65% share while 35% is public shareholding.
When did BoB share split?
Key share splits were 1:2 in 2004 and 1:10 in 2018.
Is Bank of Baroda good stock for long term?
BOB offers stability but lags in valuation growth. Investors can consider it for diversification and dividends.
Is Bank of Baroda good stock?
It is relatively undervalued among PSU bank stocks. But asset quality issues remain an overhang.
What was the share price of BoB in 2011?
Bank of Baroda share price was around Rs 490 in 2011 prior to the stock splits.
