Buy Bank of Baroda; target of Rs 127: Nalanda Securities

Nalanda Securities' research report on Bank of Baroda

Deposits grew 4% QoQ to 6.06 trillion. CASA reported growth of 4% QoQ to 2.14 trillion. Term deposits reported growth of 4% QoQ to 3.9 trillion. CASA ratio came at 35.3% as compare to 35.5% in previous quarter. Borrowings came at 66278cr (+115% YoY growth). Advances came at 4.33 trillion. Domestic advances came at 3.37 trillion (grew 3.4% QoQ). Within domestic credit, agricultural loan book grew 6% QoQ, retail book grew 6% QoQ, MSME book grew 8% QoQ while wholesale book reported 1% QoQ. Within retail book (contributes 21% of domestic book), education loan/vehicle loan/home loans reported growth of 9%/10%/4% QoQ respectively.

Outlook

We expect yields to improve given MCLR regime, although, we expect moderate growth in advances going forward. At INR 111, stock is trading at FY20E P/ABV of 1.0x. We assign P/ABV of 1.1x and arrive at target price of INR 127, implying upside of 14%.