Sharekhan has given Buy recommendation for Bank of Baroda with a target price of Rs. 128 in its research report issued on Feb 21, 2022

Sharekhan’s research report on Bank of Baroda

Bank of Baroda (BoB) reported a PAT of Rs. 2,197 crore, up by ~100% y-o-y and 5% q-o-q on account of lower provisions and strong NII growth. NII grew by 14% y-o-y and 13% q-o-q. NIM rose by 28 bps q-o-q to 3.1% in Q3FY22 due to higher credit to deposit ratio. Margins were also supported by the bank’s stance of going slower on term deposits for some time now. We believe that as the corporate credit picks up, the margin is expected to expand going ahead. Overall advances grew by 4% y-o-y and 5% q-o-q. The domestic loan book rose by 3% y-o-y and 5% q-o-q aided by retail book growth, up by 11% y-o-y and 5% q-o-q. Auto and home loans grew by ~21% y-o-y (7% q-o-q) and 11% y-o-y (4% q-o-q), respectively. The bank indicated that growth in the home loan portfolio was impacted by refinance pressures and it expects these pressures to recede as interest rates rise. The personal loan portfolio grew strong by 46% y-o-y, largely driven by BOB World (mobile banking application). Further, corporate advances increased by 6% q-o-q and flat y-o-y. However, the bank expects growth momentum to sustain going ahead. Overall asset quality improved with GNPA and NNPA declining by 86 bps q-o-q and 58 bps q-o-q, respectively, as slippages declined to Rs. 3,491 crore in Q3FY22 (~2% of advances versus 3.3% in Q2FY22). The bank has increased the provision cover to 71% versus 67% in Q2FY22. Total restructured book stood at Rs. 20, 648 crore (2.8% of advances versus 2.9% in Q2FY22) and the bank holds provisions of Rs. 3,000 crore (~15% of the restructured book). Collection efficiency (CE) excluding agriculture was at 96% in December 2021. The management expects the recovery to be good in the MSME and retail segments going ahead.


At CMP, BoB trades at 06x/0.5x its FY2023E/FY2024E BVPS and the stock has given returns of 38% in the past six months. We believe that credit growth would be driven by the bank’s focus on retail and corporate loans. With the moderation in the slippages and continued resolution in the NPA accounts, we expect asset quality to improve going ahead. Further, it remains well-capitalised with CET 1 at 11.3%. Hence, we maintain Buy on the stock with a revised PT of Rs. 128.

More Info on Trent

At 12:52 hrs Bank Of Baroda was quoting at Rs 102.15, down Rs 1.65, or 1.59 percent.

It has touched an intraday high of Rs 103.45 and an intraday low of Rs 99.50.

It was trading with volumes of 2,222,564 shares, compared to its thirty day average of 3,453,165 shares, a decrease of -35.64 percent.

In the previous trading session, the share closed down 1.52 percent or Rs 1.60 at Rs 103.80.

The share touched its 52-week high Rs 118.85 and 52-week low Rs 61.80 on 09 February, 2022 and 22 April, 2021, respectively.

Currently, it is trading 14.05 percent below its 52-week high and 65.29 percent above its 52-week low.

Market capitalisation stands at Rs 52,825.46 crore.

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