Bank of India (Buy) - Avendus

We lower the PAT forecast for FY14f-FY16f by up to c10% to factor higher provisions for the investment depreciation and lower NIM. We raise our estimate for provisions due to investment depreciation in FY14f by 9-bp to 0.29% of the G-sec at the beginning of the year, an increase of 19-bp y-o-y. NIM expansion and strong momentum in other income were the key drivers of BOI's profitability during the Jun13 quarter. Stable asset quality, with the slippage ratio staying below the recent peak, kept NPL provisions under check. The NPL trend in the Jun13 quarter was superior to peers. The stock has underperformed the broader market and CNXPSBK by c49% and c20%, respectively, in the last three months. We rollover the TP to Sep14 and lower it marginally to INR302. The TP values the stock at the one-year forward adjusted P/B of 0.76x. We maintain a Buy rating.

Source : Equity Bulls

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