Hold Bank of India; target of Rs 102: Sharekhan

Sharekhan's research report on Bank of India

Bank of India (BoI) reported strong growth in operating profits up (74% y-o-y/ 8% q-o-q) led by robust growth in NII (64% y-o-y/ 10% q-o-q) driven by sharp improvement in NIMs (up 24 bps q-o-q/ 101 bps y-o-y) and strong loan growth (18.5% y-o-y/ 3.4% q-o-q). We believe NIMs are probably closer to its peak. Core credit cost (annualized) was reported at 0.93% versus 0.60% of average advances in the last quarter. The bank has guided that core credit cost is expected to undershoot from current levels and remain well below 1% going forward over the medium term. PAT reported at Rs. 1,151 crore grew by 12% y-o-y/ 20% q-o-q. Slippages were down by 6% q-o-q at 1.2% (annualised) versus 1.4% q-o-q, coupled with higher recoveries & upgrades and higher write offs, asset quality saw sharp improvement with GNPA and NNPA ratios falling by 85 bps/31 bps q-o-q to 7.66%/1.61%. PCR at 80% vs 79% q-o-q.

Outlook

At CMP, BoI trades at 0.8x/ 0.7x/ 0.6x its FY2023E/ 24E/ 25E ABV estimates. We maintain our hold rating on the stock with a revised PT of Rs. 102. Overall, the outlook remains strong going forward however we await better price entry point factoring in margin of safety.