Hold Bank of Baroda; target of Rs 120: Sharekhan

Sharekhan's research report on Bank of Baroda

Bank of Baroda (BoB), on re-stated basis, reported weak Q1FY2020 results. NII grew by just 2.61% y-o-y to Rs. 6,496 crore because of muted advances growth. In Q1FY20, BoB reported merged entity’s numbers (it has merged two erstwhile PSU Banks with itself). Post the merger, growth outlook has weakened and asset-quality performance is still facing challenges. Capital burn has also been higher than anticipated (CET-1 erodes by 189 BPS since Q4FY2019) and bank has indicated its requirement of growth capital infusion in FY2020E.

Outlook

Hence, we maintain our Hold rating with a revised price target (PT) of Rs. 120.