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Operationally steady; growth remains dampener…

About the stock: Bank of Baroda is among leading PSU banks with a global loan book of ~| 7.3 lakh crore and has better operating metrics among PSBs.

* Pan-India presence with over 8100 branches

* The bank has a meaningful presence in international operations with its JVs and subsidiaries. Also, ~12% of total business comes from overseas

What should investors do? Bank of Baroda has seen its stock price rising over 2x in the past one year. We believe improving business outlook along with containment of slippages should help the overall performance to improve.

* We retain our BUY rating on the stock.

Target Price and Valuation: We value the bank at ~0.85x FY23E ABV and maintain our target price of | 120 per share.

Key triggers for future price performance:

* Resolution and thereby better recoveries to aid asset quality in H2FY22

* Margins to improve with lesser reversals ahead

* Retail segment to propel credit growth; signs of revival in corporate

* Comfortable capital position, CRAR at 15.5%, to aid business growth

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 ~| 47 lakh crore and also has among the best operating metrics in the PSU space

* BUY with target price of | 640

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