Sharekhan's research report on Bank of Baroda
Earnings grew 10% y-o-y mainly driven by a 48% y-o-y fall in provisions, but core operational performance was weak. Overall asset quality was broadly stable. Slower credit growth (9% y-o-y), weak fee income and lower recoveries from written off accounts partially offset by lower opex led to weak core PPoP growth (3% y-o-y), below estimates. The bank has consciously decided to slow down growth, to manage the liability mix while the bank also chose to let go business on corporate side due to higher competitive intensity.
Outlook
The bank is confident of a 12-14% loan growth in FY25 and reiterated its guidance of sustaining RoA around ~1.1%. We maintain Buy with an unchanged PT of Rs. 310 given stable outlook. At CMP, the stock trades at 1.1x/0.9x its FY25E/26E ABV.
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