Q3FY21 Result Update - Bank of Baroda - ICICI Direct

Bank of Baroda (BoB) reported a good set of numbers on the operating as well as business front compared to the previous quarter. Asset quality deteriorated marginally. However, rising concerns on stress formation proved to be a dampener. NII was up 8.7% YoY to Rs. 7749 crore, on the back of improved margins. Global NIM improved ~7 bps YoY to 2.87%, while QoQ it was largely flat. Domestic margins posted healthy expansion of ~11 bps QoQ to 3.07%. Other income growth was miniscule at 5.6% YoY to Rs. 2896 crore, on account of 11% YoY decline in fee income. Provisions remained elevated at Rs. 3957 crore; up 31.8% QoQ. The bank said Covid related provisions were worth Rs. 1709 crore. PAT during the quarter was at Rs. 1061 crore, compared to a loss of Rs. 1407 crore in the previous quarter last year.

Valuation & Outlook

A sequential pick up in loan book along with stable margins is a positive for the bank but return ratios are still significantly low. The bank's plans to raise Rs. 4000 crore in Q4FY21 seems to strengthen balance sheet but will remain dilutive for existing shareholders. Lower collection and management's indication of residual strain of stress in retail and MSME book remains near term concern. We await clarity on a revival in retail book and, thus, its impact on earnings. Thus, we maintain our target price at Rs. 70, valuing the bank at ~0.6x FY23E ABV. We maintain HOLD rating on the stock.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_BoB_Q3FY21.pdf

Shares of BANK OF BARODA was last trading in BSE at Rs.68.05 as compared to the previous close of Rs. 66.75. The total number of shares traded during the day was 5460816 in over 11388 trades.

The stock hit an intraday high of Rs. 70.15 and intraday low of 66.4. The net turnover during the day was Rs. 370550047.

Source : Equity Bulls

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