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Result and Price Analysis In 1QFY24, Bank of Baroda (BOB) has delivered an expected result on operating and asset quality front. The fresh slippages were slightly higher at ?24.5bn v/s ?22.4bn in 4QFY23. Furthermore, the reduction (up-gradation & recovery) stood ?47bn v/s ?78bn in the previous quarter. It reported GNPA (3.51% v/s 4.79% in 4QFY23) and NNPA (0.78% v/s 0.89% in 4QFY23) declined substantially along with higher PCR (incl. TWO) of 93%. The bank has witnessed robust growth in net advances (20.5% YoY, 2.4% QoQ) and deposit growth (16.2% YoY, flat sequentially) with better liquidity position (LCR of 143.6% +). Moreover the bank has reported net profit of ?40.7bn on the back of higher loan loss provision (?16.9bn v/s ?3.2bn in the previous quarter). SMA1/2 pool reduced sequentially to ~29bps. We believe the inexpensive valuation (P/ABVPS: 1.0x) makes BOB lucrative. Thus reiterate BUY with target price of ?239.

Gazing the core

Asset Quality stable: The GNPA and NNPA ratio inched down meaningfully to 3.51%/0.78% (v/s 3.79%/0.89% in 4QFY23) because of moderate slippages and steady upgrades and write-offs. The PCR including technical write-off stood ~93% of GNPLs. The absolute GNPA reduced by 5.3% sequentially and 34% YoY. Go-Air account is standard and has an exposure of ?13bn. The bank has made provision of ?5bn in the previous quarter. It has tangible collateral of more than ?10bn against the exposure. In 1QFY24, the fresh slippages were at slightly higher level of ?24.5bn v/s ?22.4bn in the previous quarter. Corporate Book contributed mere 7% of the slippages amount while Retail contribution was at 25%. SME book has slippages contribution of 47%. The reduction (up-gradation, recovery & write-offs) stood ?47bn v/s ?78bn in the previous quarter. The Bank’s SMA 1&2 book down sequentially and stood at around to 29bps. Furthermore, Restructured Book stable at ~160bn. The Bank has made provisioning of ?19.5bn; standard asset related provisions of ?1.4bn. The provision for NPAs were ?17bn (Credit cost: 0.70% v/s 0.14% in 4QFY23). ECL provision are expected to be at 1% - 1.15% of loan book.

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