2 BANKBARODA share price target reports by brokerages below. See what is analyst's view on BANKBARODA share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
We have revised our NII estimates by -7.8%/-12.6%/-15.2%, PPOP estimates by -7.6%/-19.7%/-22.3% and PAT estimates by -69.1%/-32.0%/-33.1% for FY20/FY21/FY22. We have retained Buy rating on BoB, revising our target price to Rs112 (from Rs117 earlier), valuing the stock at 0.8x H1FY22E standalone P/ABV, and ascribing a value of Rs16 to the subsidiaries.
BOB continues to report weak numbers as fresh slippages stay elevated and business growth moderates. The appointment of Mr. Sanjiv Chadha as the new MD & CEO (from SBI) removes an overhang, however, outstanding watch-list (1.6% of loans) and SMA-2 assets (~2.1% of loans) in a slowing economy remain a concern. ~29% of corporate advances are either Unrated or have BB & Below rating, which is worrying. Also, the bank has significant exposure to NBFCs. However, healthy coverage ratio and well- provided NCLT assets (~89% PCR) give us some comfort. We estimate credit cost to remain elevated in FY21 and expect earnings to normalize gradually from 2HFY21. We have lowered our loan growth assumptions in our estimates. We maintain Buy with revised target price of INR115 (0.9x Sep’21E ABV).
Valuation – BoB currently trades at <1.0x its FY2021E book value. However, post the merger, growth outlook has weakened and assetquality performance is still facing challenges. Considering the risks, we maintain our Hold rating with a revised PT of Rs. 120.
Post merger, BOB has reported modest 1Q results reflecting tepid loan growth and slight moderation in margins. We expect fresh slippages to be slightly elevated in FY20 (2.7%) driven by the merged entity’s exposure to various stressed groups and uncertain macros, before moderating in FY21. The clarity on management succession is critical as the term of the current CEO gets over in Oct’19. We estimate credit cost to remain elevated at 2.0%/1.4% in FY20/FY21. Thus, we expect the merged entity to deliver 0.7%/12.0% ROA/ROE for FY21. We maintain our target price at INR145 (1.0x FY21E ABV) and BUY rating on the stock.
We have revised our estimates for FY20/FY21 and retained Buy rating on BoB, revising our target price to Rs128 (from Rs154 earlier), valuing the stock at 0.7x FY21E standalone P/ABV and ascribing a value of Rs 13 to the subsidiaries.
BOB’s earnings saw marginal miss with our estimates at Rs7.1bn (PLe:Rs8.7bn) mainly from lower other income & higher opex from the merger. Provisions though remains elevated on continued slippages was largely in line with expectations. Slippages came in higher with corporate slippages at Rs15.0bn from Rs55.8bn was from the watchlist. But the watch-list has increased from Rs100.0bn (2.1% of loans for BOB solo) to Rs160.0bn (2.5% of loans) due to merger and similar lending in erstwhile banks. Bank also has very high exposure to NBFC segment at 15% of loans which could add to risks to asset quality (some exposure already in watchlist). We remain cautious on asset quality but PCR remains at decent levels, while other operating metrics like CASA, opex, NIMs and growth should take some more quarters to move up. Retain BUY with revised PT of Rs143 (from 161) based on 1.0x Mar-21 ABV.
We expect fresh slippages to be slightly elevated in FY20 (2.7%) driven by the merged entity’s exposure to various stressed groups and uncertain macros, before moderating during FY21. Credit cost is expected to remain elevated and we are building in credit cost of 2.0%/1.4% in FY20/21. Also, the merged entity will take some time to address the operational and IT related issues, both at the corporate and at the branch level. Thus, we expect the merged entity to deliver 0.7%/12.0% ROA/ROE for FY21. We revise our target price to INR145 (1.0x FY21E ABV) and maintain our BUY rating on the stock.
Possible surprises on asset quality front and accelerated provisioning on account of merger are likely to impact BoB’s near-term earnings. Nonetheless, strong provisioning with low NNPA ratio at 3.65% for the combined entity is a silver lining. Moreover, the Bank’s healthy growth prospects and strong capital position are likely to support valuations in forward years. Thus, we maintain our BUY recommendation on the stock with a Target Price of Rs150, valuing it at 1x FY21E ABV.
We have revised our NII estimates by 5.6%/3.6%, PPOP estimates by 4.2%/-0.4% and PAT estimates by -1.6%/2.2% for FY20/FY21, respectively. We have retained Buy rating on BoB, revising our target price to Rs158 (from Rs154 earlier), valuing the stock at 0.8x FY21E standalone P/ABV, and ascribing a value of Rs 13 to the subsidiaries.
Focus on building operational granularity and improvement in efficiency will enable the bank to pedal healthy growth. Balance sheet growth with focus on retail bodes well for risk adjusted returns and capital consumption. Recognition of majority of stressed assets and anticipated higher recovery to bolster earnings ahead. The management has ruled out any substantial impact due to merger; synergy from merger is seen to accrue at gradual pace. Rolling on to FY21E, we upgrade our target price to Rs 170 (earlier Rs 140), valuing the stock at 1.2x FY21E ABV post-merger. We maintain BUY.
While FY19 core performance shows stability, we believe the proposed merger entails costs and softer issues, and will take time to be consummated (refer to the Merger mars cyclical tailwinds). We believe BoB’s post-merger operating metrics are at risk in the near-medium term with sub-optimal returns ratios (RoA/RoE of < 0.5%/7% even in FY21).Maintain ‘REDUCE’ with a TP of INR113.
Overall performance in Q3FY19 showed significant improvement with domestic growth momentum building up, driven by retail portfolio and asset quality improvement. Management expects the trend to continue with focus on quality growth and further improving the rating profile.We have a BUY with a target of Rs. 144.
BOB has been reporting healthy traction in domestic loan growth while operating metrics are showing a gradual improvement. We expect fresh slippages to moderate over FY20/21E while steady improvement in provisioning coverage should ease incremental provisioning requirements. We lower our FY19/20E earnings by 5%/2% to reflect higher provisions and estimate BOB to deliver 0.5%/8.8% RoA/ROE for FY20e. We maintain BUY with a TP of INR140 (1x Sept-20E ABV). The imminent merger with Dena Bank and Vijaya Bank remains a key monitorable in the near term.
BOB’s earnings of Rs4.7bn (PLe: Rs8.2bn) was lower than estimate as bank continued to strengthen its balances sheet with provisioning on NCLT/Ageing and NPAs. Overall core performance was stable and better with both NII + fees seeing uptick on improving mix of loan book. Overall slippages were up sequentially but on back of partly recognized IL&FS exposure to the group entity. Other metrics like CASA, opex and NIMs remain stable. Bank has been able to improve its risk profile towards better rated assets in both domestic and international and strengthen its balance sheet by provisioning which should help sustained & gradual improvement in earnings but merger nitty- gritties will be watched out for any large out performance. Retain BUY with PT of Rs161 (unchanged) based on 1.1x Sep-20 ABV.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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