ICICI Direct, a brokerage firm has a set buy call for the stock of Bank of Baroda (BoB) with a target price of Rs 120 resulting in a gain of 19% in 12 months from the current market price of Rs 101. Bank of Baroda is a state-owned Indian banking and financial services firm based in Vadodara, Gujarat. With a worldwide loan portfolio of Rs 7.3 lakh crore, the bank is among the top PSU banks and has over 8100 branches across India.
Key triggers for future price performance of BoB according to ICICI Direct
- 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
Buy Bank of Baroda with a target price of Rs 120 says ICICI Direct
The Q2FY22 results of BoB show NII up 0.5% YoY and down 4.1% QoQ, NIMs down 19 bps QoQ to 2.85% and C/I up 121 bps QoQ; provision down 31% QoQ aiding PAT at Rs 2088 crore.
According to ICICI Direct, gross loans of BoB up 2.1% YoY and 3.1% QoQ, deposits up 0.5% YoY and GNPA down 75 bps QoQ to 8.11%, Standard restructured book at ~3%.
ICICI Direct says "The bank has a meaningful presence in international operations with its JVs and subsidiaries. Also, ~12% of total business comes from overseas. 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. We value the bank at ~0.85x FY23E ABV and maintain our target price of Rs 120 per share."
The above stock is picked from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.