Reduce Bank of Baroda; target of Rs 54: Dolat Capital

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Dolat Capital's research report on Bank of Baroda

BoB reported a loss at PBT level of of Rs17.2bn in 4QFY20 led by higher provisions, though tax reversal resulted in a PAT of Rs5bn. Slippages were lower at 2.6%, partly benefitting from asset quality standstill on overdue accounts. Higher recoveries were driven by one large recovery of Rs25bn. Moratorium by value stood at ~55% in June. Higher moratorium levels are partly attributable to opt-out extended to borrowers. BoB stands out for its conservative recognition and provisioning practices (PCR at 69%). However, with sub-par core earnings (PPoP/assets at 1.8%) and elevated credit costs over the medium term, we expected profitability to remain weak. We lower our RoA estimates to 0.1%/0.4% for FY21E/22E, factoring in the benefit of standard provision buffers (Rs27bn) in FY21E credit costs.

Outlook

We have a REDUCE recommendation on the stock with a TP of Rs54, valuing it at 0.6x of FY22E P/ABV.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment ecisions.

Read More