Buy Bank of Baroda; target of Rs 300: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Bank of Baroda has recommended buy rating on the stock with a target price of Rs 300 in its research report dated August 01, 2024.

Broker Research

August 01, 2024 / 14:33 IST

BUY

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Prabhudas Lilladher's research report on Bank of Baroda

BOB saw a good quarter since NII/NIM, opex and asset quality were better. However, fees were lower which led to core PPoP miss of 2.6%. Adjusted for 13bps recovery impact in Q4FY24, reported margins improved by 4bps QoQ to 3.14% as (1) incremental loan growth was led by retail and (2) NIM dilutive corporate assets/liabilities were shed since the bank strategically wanted to improve balance sheet mix which led to muted loan/deposit growth at 9.0% YoY. However, bank sounded confident of achieving a 12-14% loan growth for FY25E with deposit growth of 10-12%; LDR would remain between 80-82%. Due to better asset quality, provision guidance has been reduced to 75bps from 100bps. Strong LCR at 138% should suffice to absorb the impact of draft RBI circular. Stock is valued at 1.0x on Mar’26 ABV (31% discount to SBI).

Outlook

We maintain multiple at 1.2x but increase TP to Rs300 from 290 led by Rs32bn increase in equity due to revised investment norms. Retain ‘BUY’.

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