ICICI Direct recommended hold rating on Bank of Baroda with a target price of Rs 52 in its research report dated August 11, 2020.
ICICI Direct's research report on Bank of Baroda
Bank of Baroda (BoB) reported a sharp drop in its moratorium (morat) levels to ~21.4% vs. ~65% in March 2020. In terms of moratorium composition, 15.7% morat was availed by borrowers with outstanding loan amount in excess of Rs 10 lakh while the balance (5.7%) were borrowers with an outstanding loan amount less than Rs 10 lakh. Total provisioning for Q1FY21 was down 17.8% YoY to Rs 5628 crore. The bank has provided Rs 996 crore for Covid-19 during the quarter. As on June 30, 2020, total Covid provisioning was at Rs 1806 crore (~25 bps of advances). PCR increased from 81.3% in Q4FY20 to 83.3% in Q1FY21.
On the back of lower growth and muted return ratios, we value the bank at 0.5x FY22E ABV with a revised target price of Rs 52. We maintain HOLD.
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