Prabhudas Lilladher has given Buy recommendation for Bank of Baroda with a target price of Rs. 100 in its research report issued on May 31, 2021
Prabhudas Lilladher’s research report on Bank of Baroda
BOB reported loss of Rs10.5bn on DTA reversal from opting new tax regime, although PPOP was strong led by treasury/ recovery from write-off pool. Important highlight has been lower slippages at Rs30bn in Q4FY21 (adjusted to pro-forma), while restructuring also has been manageable of what has been envisaged in mid FY21. Incremental slippages to be much lower from corporate/international, while SME/Retail will be manageable. This will lead to lower provisioning requirement giving delta on return ratios with ROAs at 60- 70bps and further room from improvement in operations. Sub-optimal NIMs, SMA ratio at 3.5-4% and collection efficiency at 93% will act as risk to higher slippages than envisaged. Strong CASA, PCR of 67% and adequate capital act as catalyst for stock for reasonable valuations.
Retain BUY with revised PT of Rs.100 (from Rs82) based on 0.7x (from 0.6x) FY23 ABV.