Prabhudas Lilladher's report on Bank Of India (BOI)
"BOI reported disappointing results impacted by higher wage provisions as bank bridged the gap between its estimated wage hike vs what has already been offered by the IBA. Along with this steep rise in loan loss provisioning dented earnings by 70% YoY. BOI still continues to rely on old mortality tables and this poses another earnings risk going ahead. The bank is looking to raise capital (Rs6.4bn, EGM on 7th March) which will lead to slight improvement in Tier-I while ABV and EPS will decline marginally. We believe that BOI remains more a play on macro-recovery and cheap valuations rather than any near-term turnaround in its return ratios. We cut FY15E/FY16E earnings by 27%/25% respectively and revise our PT to Rs 285 (from Rs 350). We retain our BUY rating", says Prabhudas Lilladher research report.
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