Buy This Banking Stock For Robust Potential Gain Of More Than 40% - LKP Research

LKP Research is a leading brokerage firm in India, and in the latest report, the brokerage firm has given a buy call for a large cap company from the banking sector. LKP Research is highly bullish on Bank Of Baroda and, in the latest report, has given a target price of Rs. 202 for the stock.

As per the chart, the stock is surging rapidly to the upside and is in strong upside momentum. In the past few weeks, the stock price has only shown an upside; however, after this momentum, LKP research has mentioned the stock has the potential to gain more than 40% from the current market price.

Outlook of Bank Of Baroda

Bank of Baroda is the second largest public sector bank in terms of business and market cap after State Bank Of India, and it has a presence in over 100 offices overseas worldwide. Bank Of Baroda provides diverse services, including international banking, personal banking, corporate banking, Small and Medium enterprise (SME) banking, treasury, rural banking services, and much more.

The bank operates in more than 9,500 branches and 13,400 ATMs in India. The majority of the branches and ATMs of the bank are in rural areas of India.

Outlook of Bank Of Baroda Stock Price

Bank of Baroda is a large-cap public sector banking stock. The stock's market capitalization is over Rs. 73 640, with a current market price of Rs. 142. In addition, the stock also pays a dividend, with a dividend yield of 2.01% with a dividend payout ratio of 18.8%.

The stock price is trading near its 52-week highs, and LKP Research, a brokerage firm, suggests the price can go up to Rs. 202.

Valuation of Bank Of Baroda

"The bank is well equipped to overcome the next challenge of restructuring headwinds, akin to other banks. The guidance suggests a credit cost of ~1.5% and slippage of ~1.6% in FY23E. We expect strong growth in earnings for FY23E driven by net-interest income and a decline in credit cost, translating into ROA/ROE of 0.7%/10.8%, respectively. We value BOB at 1.1xFY24E Adj. BVPS to arrive at a revised price target of ₹202 (₹146 earlier)," said LKP research's latest report.

Buy Call Of LKP Research On Bank Of Baroda

According to the latest report of LKP research, "Bank of Baroda (BOB) has been delivering strong performance across parameters. Asset Quality is witnessing continuous improvement, and standard restructuring is at a manageable level. Furthermore, the credit growth remains healthy and is expected to grow at a robust pace. Lower credit cost and steady margins may result in strong profitability in FY23E and are expected to beat the guidance. We believe, inexpensive valuation (P/ABVPS: 0.8x) makes BOB lucrative, and we are rerating the stock with an increased target price of ₹202."