Bank of Baroda share price target

BOBs 4Q results vindicate our thesis of steady mend. As expected, operational performance witnessed improvement, with sequential loan growth ( 9.5%), NIM expansion (despite interest reversals on SDR and S4A) and strong core PPOP growth ( 33% QoQ).

Bank of Baroda (BoB), established in 1908, is amongst the oldest commercial banks in India with a substantial footprint in the domestic and international markets. BoB has a wide presence overseas with almost one-third of the total business, coming from its international business. Bank of Baroda has a network of 5,351 domestic branches, 107 overseas...

BUY Bank of Baroda at CMP Rs. 175 and add on dips to Rs. 175-160 for the Target of Rs. 220

With better NIM performance and higher treasury gains, the management expects the healthy PPOP performance to continue in 4Q and FY18. The bank plans to monetise its non-core investments in NSE and UTI MF via an IPO in FY18. Further, it also plans to unlock value in subsidiaries. We have not factored these one-off gains in our PPOP estimates.

BOB reported PAT of Rs 2.5 bn, weighed down by one-time interest reversals on SDR/S4A accounts (~Rs 3.6 bn) and higher provisions (up 16% QoQ). NIM too declined 23 bps QoQ to 2.1% given falling LDR (down ~580 bps YoY) and aforementioned interest reversals.

BoB's 3QFY17 results remained disappointing. The bank continues to face headwinds on asset quality on one hand, while on the other hand the balance sheet continued to de-grow as the management intentionally downsized some low margin business. Coming few quarters might be challenging for the bank. With continued pressure on asset quality a..

BOBs 3Q earnings were a mixed bag. The key disappoints were (1) higher slippages, (2) sharp drop in NIM, (3) dip in Tier I and (4) below estimates core and net earnings. However, on the positive front (1) PCR further improved to 65% (best amongst peers), (2) watch-list (-27%) and SMA II (-32%) significantly dropped QoQ, (3) net stressed were assets stable at 9.4% and (4) CASA surged 25% (33%, 560bps QoQ).

ICICI Securities Ltd | Retail Equity Research PAT declined 54% QoQ to | 253 crore, below our estimate of | 412 crore led by higher-than-expected provisions and large trading gains Asset quality stress continued with high slippages at | 3073 crore vs. | 2252 crore in Q2FY17 while absolute GNPA slowed to | 42642 crore (11.4% of loans) from | 42949 crore in Q2FY17 due to higher w/offs. Consequently, NNPA declined to | 19006 crore from | 19342 crore with NNPA ratio dipping 3bps QoQ at 5.43%....

ICICI Securities Ltd | Retail Equity Research Though asset quality stress continued, the pace was considerably lower than previous quarter. Fresh slippages were at | 2252 crore in Q2FY17 compared to | 5527 crore in Q1FY7 & | 5030 in Q4FY16. Absolute GNPA was stable QoQ at | 42949 crore (GNPA ratio at 11.35%) owing to healthy recoveries & upgrades. The restructured book was at | 13860 crore, forming ~3.9% of total loans. Total stressed assets (GNPA + restructured) were at 15.3%...