Accumulate Bank of Baroda; target of Rs 194: KRChoksey

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26 Aug, 2025 12:21

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KRChoksey's report on Bank of BarodaIn the catastrophic earnings of Bank of Baroda, PAT for the quarter declined by staggering almost 88%+ y/y and q/q to INR 1245 mn, absolutely below our estimates. Although clean-up exercise was on expected lines, the shrinkage in PAT was far below the expectations. Stupendous increase in provisions 113% y/y and as high as 215% q/q and higher deterioration in asset quality ( almost 80%+ jump in GNPAs and 90%+ in NNPAs) dragged the profitability for the bank. However, rich liability franchise and clean-up exercise should yield positive results and hence we advise to ACCUMULATE on dips.Outlook and Recommendation: Overall Q2FY16 earnings stood catastrophic in terms of both profitability and quality. However, we reckon that the new head at the helms, Mr Jayakumar should be engaged in the balance sheet clean-up exercise and the intermittent pressures for another couple of quarters stand imminent before we see the financials turning around for the better. Therefore, factoring in higher NPAs and revising downwards our earnings estimates, we arrive at a target price of INR 194 valuing the bank at 1.25x P/ABV FY17E. While the downside in the stock should provide opportunity to “ACCUMULATE” the stock given the rich liability franchise and the positive outlook by the new CMD, we definitely maintain an upward bias. At CMP INR 169, the stock is trading at 1.1x P/ABV FY17E, says KRChoksey research report.For all recommendations, click here 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.

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