Bank of Baroda - March 2013 Results Preview - Motilal Oswal

- While domestic business growth is expected to remain moderate YoY, helped by international operations, overall loan and deposit growth are expected to be ~15% and ~14% respectively.

- NIMs are expected to moderate and blended NIMs to be ~2.6%.

- Fee income growth is expected to be less than 5%. However, overall non-interest income to grow 16%+ led by higher income from profit on sale of investments.

- Pressure on asset quality is likely to continue and slippages to remain at a high level. In 3QFY13, gross slippages stood at INR20b (3.1% annualized slippage ratio) and net addition to restructured loans was INR9.2b (30bp of overall loans).

- Hence, credit cost is expected to remain at a high level and we factor a credit cost of ~95bp.

- The stock trades at 0.8x FY14E and 0.7x FY15E BV, and 5.7x FY14E and 4.8x FY15E EPS. Maintain Neutral.

Source : Equity Bulls

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