Prabhudas Lilladher has given Buy recommendation for Bank of Baroda with a target price of Rs. 125 in its research report issued on May 14, 2022
Prabhudas Lilladher’s research report on Bank of Baroda
Bank of Baroda (BoB) Q4FY22 earnings were mixed. While NII and PAT were largely in-line, growth came at the cost of NIM as credit offtake was healthier but NIM declined QoQ due to strong overseas book growth. Corporate saw an uptick while retail momentum continues. Loan growth in FY23 is targeted at 10-12% although lower NIM remains a cause of concern. Asset quality too was mixed since gross slippages were higher while GNPA declined QoQ led by stronger loan growth and higher write-offs. However, increase in PCR to 75% and a higher CET-1 to peers at 11.7% provide some cushion. Considering the difference in the RoE and earnings quality, BoB should trade at a ~40% discount to SBI.
We retain BUY but trim multiple on FY24 ABV from 1.0x to 0.9x. Retain BUY but revise TP to Rs125 (earlier Rs150).