Motilal Oswal has given Buy recommendation for Bank of Baroda recommended buy rating on the stock with a target price of Rs 130 in its research rep with a target price of Rs. 130 in its research report issued on Nov 10, 2021
Motilal Oswal’s research report on Bank of Baroda
BOB reported a strong earnings performance, supported by lower provisions and higher other income, even as NII remained under pressure. Domestic NIM moderated by 22bp QoQ to 2.9%. Business trends, however, improved, with advances growing at 4% QoQ. Asset quality witnessed an overall improvement. Fresh slippage stood at INR52.2b (annualized slippage rate at 3%). However, higher write-offs and recoveries resulted in an improvement in asset quality. The GNPA/NNPA ratio declined by 75bp/20bp QoQ, while PCR was stable ~67%. Total SMA 1/2 (over INR50m) declined to 1.87%, while the restructured book stands at INR205b (2.95% of loans). Collection efficiency (excluding Agri) improved to 96% in Sep’21 v/s 93% in Jun’21.
We increase our FY22E/FY23E earnings estimate sharply by 39%/14% and expect a RoA/RoE of 0.7%/10.9% by FY23E. We maintain our BUY rating with a revised TP of INR130 per share (0.9x Sep’23E ABV).