Emkay Global Financial has given Buy recommendation for Bank of Baroda with a target price of Rs. 145 in its research report issued on Feb 08, 2022
Emkay Global Financial’s report on Bank of Baroda
BOB posted a strong beat on PAT at Rs22bn (est: Rs11.4bn), mainly aided by better NIMs and provision reversals due to the Air India resolution. The GNPA ratio improved by 85bps qoq to 7.3% mainly due to lower slippages/higher w-offs, while the standard net restructured book inched up to 2.8% of loans, with a lower relapse rate as of now. Credit growth improved to 4% yoy/5% qoq, led by corporate acceleration, but it remained below the systemic level, dragged by SME and retail books (due to slower mortgage growth/lower pool buyouts). BOB expects growth to be around 7-10% in FY22 and NIMs to remain healthy due to better growth/lower interest reversals on NPAs. BOB has ramped up the provision cover to 71%, which should limit incremental provisions on stock of NPAs. It has reversed Rs13bn of provisions on Air India in Q3 and a similar reversal will be seen in Q4, which will support profitability. Factoring in better growth/NIMs and lower LLP, we upgrade FY22E/23E/24E EPS by 28%/9%/7%.
We expect BOB’s RoE to gradually improve to 9-12% over FY22-24E from a low of 1% in FY21, reflecting a better growth, margin and asset quality trajectory. Thus, we retain Buy/OW in EAP with a revised TP of Rs145 (vs. Rs130) based on 0.9x Dec’23E ABV (vs. 0.8x earlier).
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At 14:00 hrs Bank Of Baroda was quoting at Rs 106.65, down Rs 0.35, or 0.33 percent.
It has touched an intraday high of Rs 108.35 and an intraday low of Rs 105.65.
It was trading with volumes of 1,505,398 shares, compared to its thirty day average of 3,505,210 shares, a decrease of -57.05 percent.
In the previous trading session, the share closed down 2.90 percent or Rs 3.20 at Rs 107.00.
The share touched its 52-week high Rs 118.85 and 52-week low Rs 61.80 on 09 February, 2022 and 22 April, 2021, respectively.
Currently, it is trading 10.27 percent below its 52-week high and 72.57 percent above its 52-week low.
Market capitalisation stands at Rs 55,152.58 crore.