ICICI Direct is bullish on Bank of Baroda has recommended buy rating on the stock with a target price of Rs 170 in its research report dated May 23, 2019.
ICICI Direct's research report on Bank of Baroda
Bank of Baroda (BoB) reported robust operating earnings led by strong NII of 26.6% YoY & healthy other income at 16% YoY. However, higher provision at Rs 5550 crore dented earnings with loss at Rs 991 crore. Credit growth came in at ~10% YoY at Rs 468819 crore, led by ~13% YoY growth in domestic advances; further driven by retail (24% YoY), corporate (~16% YoY) & agriculture (14% YoY).
Focus on building operational granularity and improvement in efficiency will enable the bank to pedal healthy growth. Balance sheet growth with focus on retail bodes well for risk adjusted returns and capital consumption. Recognition of majority of stressed assets and anticipated higher recovery to bolster earnings ahead. The management has ruled out any substantial impact due to merger; synergy from merger is seen to accrue at gradual pace. Rolling on to FY21E, we upgrade our target price to Rs 170 (earlier Rs 140), valuing the stock at 1.2x FY21E ABV post-merger. We maintain BUY.
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