Buy Bank of Baroda; target Rs 968.4: Aditya Birla Money

25254 Investors following Bank of Baroda. Share this News with them.

0

Like this story, share it with millions of investors on M3

Buy Bank of Baroda; target Rs 968.4: Aditya Birla Money

Aditya Birla Money is bullish on Bank of Baroda (BOB) and has recommended accumulate rating on the stock with a target of Rs 968.4 in its January 30, 2012 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Accumulate Canara Bank; target of Rs 515: Dolat Capital Motilal Oswal neutral on Godrej Consumer Products Sell Colgate Palmolive; target of Rs 823: Motilal Oswal ALSO READ See previous views by Aditya Birla Money See what other Experts & Brokerages are saying about Bank of Baroda See messages about Bank of Baroda Bank of Baroda BSE | NSE 31/05/12 Are Mutual Funds betting on Bank of Baroda?

Aditya Birla Money is bullish on Bank of Baroda (BOB) and has recommended accumulate rating on the stock with a target of Rs 968.4 in its January 30, 2012 research report.

"Bank Of Baroda (BOB), net Profit after tax for the current quarter increased 20.7% YoY (10.6% QoQ) to Rs 12898.5 mn from Rs 10688.8 mn for Q3 FY11. The growth in PAT on YoY basis was mainly driven by 15.8% YoY (3.5% QoQ) increase in the NII at Rs 26555.1 mn (led by robust growth in advances 25.8% YoY and 9.0% QoQ) and 70.0% YoY (56.5% QoQ) increase in other income (led by higher trading gains). Higher net income aided in better operational efficiency during the quarter at 31.5% down 619 bps YoY and 373 bps QoQ. However, higher provisions during the quarter (increase by 179.5% YoY and 71.2% QoQ) led by higher slippages (~9.5 bn) has moderated the growth in profit to some extent."

"Global Net Interest Margins (reported) declined both on a YoY basis and sequentially by 21 bps and 8 bps respectively to 2.99% driven by sharp decline in domestic NIMs by 31bps and 16 bps on a YoY and QoQ basis respectively. Overseas NIMs on the other hand increased by 22 bps sequentially. On the flip side higher yield on investments both in the domestic and overseas book has provided some support to the margins. Total business of the bank registered a robust growth of ~24.8% YoY (7.3% QoQ) as at Q3FY12 (partly supported by robust growth in overseas book due to currency depreciation). Deposits grew by 24.0% YoY (6.1% QoQ) from Rs  2815.1 bn in Q3 FY11 to Rs 3492.1 bn in the current quarter, whereas Net Advances grew by 25.8% YoY (9.0% QoQ) from Rs 2072.1 bn to Rs 2606.6 bn over the same period. Share of domestic CASA deposits remained stable at 34.05% an increase of 3 bps QoQ despite higher term deposit rates, mainly on the back of higher branch additions."

"Asset quality deteriorated during the quarter with gross NPA increasing by 14.5% QoQ and 40.6% YoY (led by one large aviation account). In percentage term GNPA increased by 16 bps YoY (7 bps QoQ). The slippages during the quarter stood at ~1.6% annualised. The restructured book during the quarter increased by Rs 21.2 bn taking the total restructured book to Rs 99.5 bn (~3.8% of the loan book). The management has indicated that the large part of the restructured account during the quarter pertains to one account in telecom infrastructure sector. Till date 12.7% of the total restructured book of Rs 99.5 bn has slipped into NPAs. The bank had opened 199 new branches in this quarter taking the total number of branches to 3691. Large numbers of branches were opened in UP & Uttaranchal; Gujarat; Southern Zones & Rajasthan."

"The bank has witnessed sharp deterioration in its asset quality during the quarter with restructured book going up from 3.3% of the loan book to 3.8%. Considering the risk of higher slippages in the restructured portfolio we have increased our provisioning assumptions for FY12E and FY13E by 26.0% and 23.0% respectively. We estimate BoB to report an EPS CAGR of 14.9% over FY11-FY13E. ABV is estimated to grow at 18.9% CAGR during the same period. We believe with the deterioration in asset quality, the premium valuation that bank commands over its peer group is likely to come under pressure going forward and consequently we have reduced our target multiple from ~1.4x to ~1.3x with a revised target price of Rs 968.4 (Rs 999.7 earlier), providing an upside potential of 27.4% from current levels. Retain Buy," says Aditya Birla Money research report.

Public holding more than 90% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment