Emkay Global Financial's research report on Bank of Baroda
Bank of Baroda (BoB) reported strong PAT beat at Rs52bn/RoA of 1.3%, mainly due to higher other income (led by treasury gains and recovery in TWO accounts), and partly offset by higher provisions (including contingent provisions). After realigning the book in Q1, BoB reported healthy broad-based credit growth at 12% YoY/7% QoQ. However, NIM shrunk by 8bps QoQ to 3.1% due to lower yields. Headline GNPAs declined by 38bps QoQ to 2.5% in absence of lumpy NPAs, similar to a few peers. Management indicated that 1/3rd of aviation exposure against guarantee has been recovered and the rest is under legal process. The management has revised its guidance for FY25 with credit growth of ~11-13% and deposit growth of 9-11%, while NIMs likely to remain range-bound at 3.15% +/-5bps. We largely retain our earnings estimates and expect the bank to deliver healthy RoA of 1.1-1.2%/RoE of 15-16%.
Outlook
We retain BUY on BoB with an unchanged TP of Rs325 rolling forward on 1.1x SA Sep-26E ABV and subs value at Rs15/sh.
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