Buy Bank of Baroda Ltd For Target Rs.170 - ICICI Direct
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
https://t.me/InvestmentGuruIndiacom
Download Telegram App before Joining the Channel
Robust performance; guidance remains steady…
About the stock: Bank of Baroda is among leading PSU banks with a global loan book of ~| 8.7 lakh crore and has better operating metrics among PSBs.
* Pan-India presence with over 8161 branches and 11461 ATMs
* The bank has a meaningful presence in international operations with its JVs and subsidiaries. Also, ~18% of total business comes from overseas
Q2FY23 Results: Robust earnings led by healthy topline & lower provision.
* NII up 34.5% YoY at | 10174 crore, NIMs up 31 bps QoQ at 3.33%
* C/I up 61 bps YoY to 49.7%; provisions down 3.4% QoQ, 40.9% YoY
* PAT at | 3313 crore, up 58.7% YoY, ahead of our estimate
* GNPA down 95 bps QoQ to 5.31%, R/s book at | 17725 crore
What should investors do? Bank of Baroda has seen its stock price rising over 3x in the past two years. Healthy growth momentum coupled with improvement in margins and asset quality is expected to aid RoA and, thus, valuations.
* We retain our BUY rating on the stock
Target Price and Valuation: We value the bank at ~0.9x FY24E ABV and revise our target price to | 170/share from | 160/share earlier.
Key triggers for future price performance:
* Advantage of faster repricing of loans should continue in the next couple of quarters. Guidance maintained 10 bps higher at 3.2-3.25%
* Continued growth in advances in line with industry. Any moderation in retail loan growth to be offset by gradual pick-up in corporate book growth
* Steady CI ratio, lower credit cost to aid healthy earnings growth momentum
* Guidance continued to remain at RoA – 1% in FY24E with an upside bias
Alternate Stock Idea: Apart from Bank of Baroda, in our coverage we also like SBI.
* SBI is the largest bank in India with a balance sheet size of ~| 53 lakh crore and also has among the best operating metrics in the PSU space
* BUY with target price of | 605
To Read Complete Report & Disclaimer Click Here
https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
Above views are of the author and not of the website kindly read disclaimer
