Buy Bank of Baroda; target of Rs 217: Motilal Oswal

Motilal Oswal's research report on Bank of Baroda

Bank of Baroda (BoB) reported PAT of INR 1.5b (70% miss) v/s INR 2.5b in 3QFY17. The strong operating performance (+17% YoY; 36% beat) was driven by robust fee income growth (+50% YoY/QoQ) and controlled opex (flat YoY).

Outlook

We expect stress addition and credit costs to reduce in FY18/19. Additional buffers like noncore financial investments among other options will lead to dilution-free growth in the near term. We largely maintain estimates. Maintain Buy with a TP of INR 217 (1.2x FY19BV) – based on RI model.