Buy Oriental Bank; target of Rs 380: Religare Capital

Religare Capital's report on Oriental Bank of Commerce (OBC)

"OBC will continue to focus on balance sheet consolidation and has guided for 10-12% loan growth in FY15 biased towards the secured retail portfolio. We like the bank’s strategy of consolidation in the current stressed environment as this not only helps to conserve capital but also to sharpen the focus on asset quality. NIMs have bottomed out, but are unlikely to see much improvement in the near term. We believe moderating interest reversals and a decline in wholesale rates would keep margins stable at current levels. OBC maintains its NIM guidance of 2.6-2.7% for FY15."

"OBC has a relatively better CET-I of 8.4% amongst peers which, together with a focus on consolidation, would enable it to leverage growth opportunities ahead. Healthy capitalisation will help boost revenue growth and absorb credit cost pressure during the early recovery period. buy the stock with a target price of Rs 380", says Religare Capital research report.

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