Bank of Baroda (Buy) - Avendus

We lower the FY14f-FY16f PAT forecast by up to 13.5% to factor higher provisions for NPLs, investment depreciation and lower NIM. We raise our assumption for the FY14f-FY16f incremental NPL by up to 10-bp. NPL provisions/loans is estimated at 79-bp, 8-bp higher than the past three years' average. Despite the rise, slippage stays below peers and in line with management guidance. We raise our estimate for provisions due to investment depreciation in FY14f to 0.55% of the G-sec at the beginning of the year, 20-bp higher y-o-y. We lower the FY14f NIM estimate by 6-bp to 2.19%, implying a contraction of 14-bp y-o-y. The stock underperformed the broader market by c27%, but outperformed the CNXPSBK by 3% in the last three months. We rollover the TP to Sep14 and lower it to INR749. The TP values the stock at a one-year forward adjusted P/B of 0.90x. We maintain a Buy rating.

Source : Equity Bulls

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