Reduce Bank of Baroda; target of Rs 47: Dolat Capital Market

Dolat Capital Market's research report on Bank of Baroda

BoB reported better than expected with NII and PPoP growth of 7% and 4% YoY respectively led by elevated treasury gains (doubled QoQ to 10bn), healthy recoveries from WO pool. PAT benefitted from low provisions. NIM was sequentially higher by 30 bps to 2.86% due to lower slippages at 2% (including standstill NPAs) and improved spreads. Without standstill on NPAs, gross NPAs would be at 9.33% against 9.39% in Q1FY21. The bank made 20% provisions against standstill loans.

Outlook

Tweaking our estimates and rolling over to Sep22E, we maintain REDUCE call with a TP of Rs47, valuing the bank at 0.4x of Sep-22E P/ABV. Provisioning.

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