Emkay Global Financial has given Buy recommendation for Bank of Baroda with a target price of Rs. 130 in its research report issued on May 14, 2022

Emkay Global Financial’s report on Bank of Baroda

Despite lower other income and higher provisions, BOB reported in-line PAT at Rs17.8bn (est.: Rs17.9bn), mainly due to healthy NII growth, lower staff costs and tax provisions. Despite higher slippages, the GNPA ratio rose by 64bps qoq to 6.6% on higher woffs/recoveries. The standard net restructured book reduced to 2.4% of loans in Q4. Credit growth improved to 10% yoy/6% qoq, driven by retail/agri, but corporate/SME growth was sluggish. BOB expects credit growth to be around 10-12% in FY23, which coupled with a higher share of floating rate book, healthy CASA ratio and lower interest reversal on NPAs, should lead to a strong margin trajectory. The bank has utilized one-off gains from Air India (Rs10bn in Q4; Rs13bn in Q4) to ramp up the provision cover to 75%, which should contain incremental LLP. Factoring in better growth/NIMs and lower LLP, we expect the bank’s RoE to gradually improve to 11-13% over FY23-25E.


BOB remains well-capitalized among large PSBs, with a CET-1 ratio of 11.7% post QIP. It is also better-positioned to accelerate profitable growth. Retain Buy/OW in EAP with a revised TP of Rs130 (earlier TP of Rs145), based on 0.7x FY24E ABV (0.9x Dec’23E ABV earlier) due to higher CoE.

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