Motilal Oswal neutral on Bank of Baroda

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Motilal Oswal neutral on Bank of Baroda

Motilal Oswal has maintained neutral rating on Bank of Baroda (BOB) with a target of Rs 1000, in its January 27, 2012 research report.

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Motilal Oswal has maintained neutral rating on Bank of Baroda (BOB) with a target of Rs 1000, in its January 27, 2012 research report.

"Bank of Baroda's 3QFY12 PAT grew 21% YoY to INR12.9b. While provisions at INR8.4b were significantly higher than our estimate of INR4.8b, strong growth in treasury (INR3.9b v/s INR848m in 3QFY11) and forex income (INR2.4b v/s ~INR1.5b in 2QFY12 and 3QFY11) led to higher than estimated PAT."

"Slippages during the quarter stood at INR9.5b (annualized slippage ratio of 1.8% v/s 1.2% in 2QFY12), of which INR3b was on account of the aviation sector. Gross NPAs increased 14% QoQ to INR39b, whereas net NPAs increased 18% QoQ to INR13.2b. In 3QFY12, bank restructured loans of INR21.2b (~120bp of domestic loans), led by the large corporate segment. Total outstanding domestic restructured book stands at ~INR99.5b (5.5% of domestic loans), of which ~12.7% has turned into NPAs.x Reported domestic margins were 3.51% v/s 3.67% a quarter ago. While cost of deposits increased 6bp QoQ, yield on loans declined 13bp QoQ, leading to margin decline. Overall loans grew ~9% QoQ and 26% YoY to INR2.6t. Global deposits grew 24% YoY and 6% QoQ. Global and domestic CASA deposit grew at ~16% YoY."

"We expect the bank to report an EPS of INR122 for FY12 and INR133 for FY13. BV is expected to be INR606 in FY12 and INR713 in FY13. The stock trades at 1.3x FY12E BV and 1.1x FY13E BV. We believe credit cost is at its best and room for positive surprise is limited. Maintain Neutral," says Motilal Oswal research report.

Institutional holding more than 40% in Indian cos

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To read the full report click on the attachment