Bank of India an outperformer; target of Rs 195: Karvy

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Broking house, Karvy Stock Broking has rated an outperformer rating on the Bank of India with a target price of Rs 195.

Karvy Stock Broking report on Bank of India:

Recently, Bank of India (BoI) has taken 76% stake in an Indonesian bank, P T Bank Swadesi Tbk at around Rs.1.12 billion. BoI would make   open offer for the rest 24% stake later. BoI has presence in Indonesia for   last three decades through representative office. The bank foresees strong   growth potential in Indonesia and bilateral business with India. The   acquisition is the part of international expansion to cash in on developing   opportunities in international trade.  

This is the first overseas acquisition by BoI; the bank already has footprint   in 12 countries through 24 branches and representative offices. The bank   generates considerable chunk of business from international operations.  

The Bank's international operation has been augmenting overall margins and spread. Over the period we witness improvement in spread. The bank has been selective in choosing the area of operation and offering whole gamut of financial products. The bank has been mainly targeting Indian Diaspora across globe.

The initiative taken by the bank is quite encouraging and would add value to BoI's bottomline in long term. Recent RBI's decision to increase CRR (cash reserve ratio) by 50 basis points would impact the bank's bottomline by Rs 500 million (3.8% of FY08 PAT). We rate the stock as an outperformer with a target price of Rs 195 per share.