Prabhudas Lilladher is bullish on Bank of Baroda has recommended buy rating on the stock with a target price of Rs 146 in its research report dated July 26, 2019.
Prabhudas Lilladher's research report on Bank of Baroda
BOB's earnings saw marginal miss with our estimates at Rs7.1bn (PLe: Rs8.7bn) mainly from lower other income & higher opex from the merger. Provisions though remains elevated on continued slippages was largely in line with expectations. Slippages came in higher with corporate slippages at Rs15.0bn from Rs55.8bn was from the watchlist. But the watch-list has increased from Rs100.0bn (2.1% of loans for BOB solo) to Rs160.0bn (2.5% of loans) due to merger and similar lending in erstwhile banks. Bank also has very high exposure to NBFC segment at 15% of loans which could add to risks to asset quality (some exposure already in watchlist).
We remain cautious on asset quality but PCR remains at decent levels, while other operating metrics like CASA, opex, NIMs and growth should take some more quarters to move up. Retain BUY with revised PT of Rs143 (from 161) based on 1.0x Mar-21 ABV.
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