Religare's research report on Bank of BarodaBOB reported a PBT loss of Rs 45bn for Q3FY16 as provisions spiked QoQ. However, tax write-backs of Rs 11bn helped the bank narrow the loss to Rs 33bn. Asset quality worsened as stressed asset formation rose to Rs 240bn with Rs 156bn of fresh slippages, Rs 3bn of fresh restructuring, Rs 54bn of 5:25 and Rs 24bn of SDR. On a positive note, management is confident of having cleaned up its books, leaving no uncertainty for future quarters. We cut earnings and reiterate SELL with a new Mar’17 TP of Rs 115 (from Rs 145).We cut our FY16-FY18 earnings estimates to factor in the sharp rise in provisions and to account for the loss reported in Q3. Despite the cleanup exercise, we maintain SELL and move to a lower Mar’17 TP of Rs 115 (from a Sep’16 TP of Rs 145), as valuations are rich at 1.5x FY17E ABV despite assuming lower NNPA by FY17-end and a 30% hit to the restructured portfolio.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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