Prabhudas Lilladher has given Buy recommendation for Bank of Baroda with a target price of Rs. 82 in its research report issued on Jan 28, 2021
Prabhudas Lilladher’s research report on Bank of Baroda
BOB’s reported an Rs10.6bn of PAT (PLe: Rs16.9bn) as higher provisions and marginally lower PPOP dent earnings. On Pro-forma basis bank would have seen GNPA/NNPA move up by 30/63bps QoQ with slippages of Rs112bn (Rs83bn unrecognized). Positive was lower restructuring at 140bps of loans with guidance of 200bps of loans by Q1FY22 which is lower than expected but majorly remains from corporate book. Bank SMA 1&2 book also remains higher at 3.3% of loans, keeping threat on asset quality. Management has mentioned they need to keep close vigil on retail/MSME as restructuring is lower and stress could come with a lag.
Improved PCR, improved growth trends post-merger, strong CASA are positives, while sub optimal NIMs, slippages remaining high and capital are key hindrances. Retain BUY with PT of Rs82 (unchanged) based on 0.6x Mar-23 ABV.