Buy Bank of Baroda; target of Rs 65: Prabhudas Lilladher

Prabhudas Lilladher's research report on Bank of Baroda

BOB’s earnings saw sharp miss and reported Rs8.64bn of loss on back of high provisioning, although asset quality improved with continued PCR enhancement. 21% of the loan book was under moratorium falling significantly as offering morat on selected basis. NII performance was decent but lower other income & higher staff opex led to mediocre PPOP. Concerns have remained from high NBFC share, while high mix of corporate/SME book can see higher restructuring and hence we believe, high credit cost will continue to remain a challenge to profitability.

Outlook

Decent flow in low cost liabilities and strong PCR of 72% provides some comfort to B/s. Retain BUY with revised PT of Rs65 (from 83) based on 0.6x Mar-22 ABV.

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