Geojit BNP Paribas is bullish on Bank of Baroda has recommended buy rating on the stock with a target price of Rs 186 in its research report dated November 25, 2016.
Geojit BNP Paribas's research report on Bank of Baroda
While H1FY17 witnessed consolidation, lower delinquency, improving margin and higher coverage ratio were the key positives. Though we expect consolidation in loan book to continue for the next couple of quarters, we continue to like the bank owing to its strong capital position, able management and improving return ratios. However, the benefits from consolidation will gradually accrue over next 2-3 years. As a result, we expect the bank to report RoA of 0.5% and RoE of 7.6% by FY18E. Besides, recognition of most of the stressed accounts as NPA leaves minimal asset quality overhang for the future. Hence, we continue to maintain BUY rating with a revised upwards TP of Rs186 valuing the bank at P/ABV of 1.5x for FY18E. (Previous TP: Rs165).
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