Buy Bank of Baroda; target of Rs 310: Sharekhan

Sharekhan's research report on Bank of Baroda

Earnings significantly above estimates, grew by 23% y-o-y mainly driven by higher recoveries from written off accounts leading to higher RoA at 1.3%. Sustainable RoA trajectory remains at 1-1.1% for the bank.Total provisions were higher than expected led by higher standard asset provisioning and contingent provisions created. Core credit costs stood lower at 65 bps annualised vs 48 bps q-o-q and 93 bps y-o-y. Slippages were lower at 1.2% vs 1.3% q-o-q.NIMs fell by 8 bps q-o-q on expected lines to 3.1%. Loan growth picked up, grew by 12% y-o-y/ 7% q-o-q while deposits grew by 9% y-o-y/ 4% q-o-q. The bank has lowered down its guidance on loan growth marginally for FY25E citing lower deposit accretion although upside risk to guidance persist. Credit-deposit ratio stood at 82% versus 80% q-o-q.

Outlook

We maintain Buy with an unchanged PT of Rs. 310. At CMP, the stock trades at 1.0x/0.8x its FY25E/26E ABV.