Motilal Oswal is bullish on Oriental Bank of Commerce and has recommended buy rating on the stock with a target of Rs 320 in its August 1, 2012 research report.
“Oriental Bank of Commerce (OBC) reported 10% YoY and 48% QoQ PAT growth (24% above estimates), led by (1) higher recoveries from written-off accounts (INR2b), boosting non-interest income, and (2) sequential decline in slippages and higher MTM provision reversals, leading to lower provisions.”
“Reported margins improved 11bp QoQ to 2.79%, as the yield on funds improved 6bp QoQ and cost of funds declined 4bp QoQ, led by sequential decline in bulk deposits (declined 3.5% QoQ to INR415b). Asset quality surprised positively, as contrary to peers, gross slippages declined from INR13.2b in 4QFY12 to INR7b. GNPAs declined 6% QoQ, driven by (1) healthy recoveries and upgradations at ~INR4.3b, and (2) higher write-offs at INR4.8b v/s INR5.4b in 4QFY12. OBC restructured loans aggregating INR20.4b, resulting in net cumulative book of INR109b (9.6% of loans). Loans grew 16% YoY and remained flat QoQ at INR1.14t. While deposits grew 9.4% YoY. Core deposit grew by 20% YoY and 3% QoQ. CASA ratio remained stable QoQ at ~24%. We expect OBC to report RoA of ~0.7% and RoE of ~12.4% over FY13/14. The stock trades at 0.6x FY13E BV and 0.5x FY14E BV. Maintain Buy,” says Motilal Oswal research report. Shares held by Financial Institutions/Banks 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
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