Sell Bank of India; target of Rs 116: ICICIdirect

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

ICICIdirect's report on Bank of IndiaBoI reported a loss of Rs 1126 crore against our estimated PAT of Rs 287 crore. This was largely due to higher-than-expected provisioning expenses of Rs 3237 croreAsset quality deterioration was steep QoQ with GNPA increasing to Rs 29894 crore (GNPA: 7.6% vs. 6.8% in Q1FY16) from Rs 26889 crore. NPA related provisioning expenses were highest ever at Rs 3036 croreFresh slippages stayed at elevated levels at Rs 6251 crore, which is similar to that seen in the previous two quartersCredit de-grew 1% YoY to Rs 395785 crore. Deposits traction was also muted at 1.3% YoY to Rs 525196 croreOutlook and valuationBoI has a very similar profile to its peer BoB in terms of branch location, asset size, overseas loans and CASA ratio. BoI’s RoE (25%) and RoA (1.5%) in FY09 were superior to BoB. However, later on, due to higher credit cost and opex, yearly earnings of BoI declined to ~Rs 2600 crore (average) over FY10-14 compared to ~Rs 4500 crore (average) by BoB. In FY15, PAT further declined to Rs 1709 crore for BoI, and is entering the loss zone in FY16.Accordingly, RoEs have fallen to 5.6% and are expected to stay in single digit by FY17E due to lower growth, lower margins and higher provisions estimated. We have further lowered our earnings estimates by ~38% in FY17E while we factor in loss during FY16E. This is due to factoring in of higher asset quality stress and, consequently, higher credit cost. This resulted in FY17E ABV declining to Rs 157 vs. Rs 177 earlier. Even on maintaining our target multiple at 0.7x FY17E ABV, the target price dips to Rs 116 from Rs 125 earlier. We maintain our SELL recommendation, says ICICIdirect research report.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.

Read More