Motilal Oswal Neutral on Bank of Baroda

Bank of Baroda (BOB IN; Mkt Cap USD6.7b, CMP Rs835, Neutral)

The bank's domestic margins expanded 20bp QoQ to 3.82% (up 42bp YoY, up 32bp YTD) led by stable cost of deposits at 5.27%.

Loans grew 7.4% QoQ and 33% YoY to Rs2.07t and deposits grew 4.4% QoQ and 31% YoY to Rs2.82t. Global CD ratio improved QoQ to 73.6% v/s 71.6%.

Domestic CASA deposits grew at an impressive 23% YoY and 3% QoQ to Rs756b. Domestic CASA ratio was at 35.2% from 35.9% a quarter earlier.

3QFY11 fee income growth moderated to 7% YoY (down 5% QoQ). In 9MFY11 fees grew just 12% YoY.

The bank declared its second pension liability of Rs20.6b and it plans to amortize it over five years.

We expect the bank to post EPS of Rs110 in FY11, Rs127 in FY12 and Rs154 in FY13. BV is expected to be Rs470 in FY11, Rs570 in FY12 and Rs692 in FY13. The stock trades at 1.5x FY12E BV and 1.2x FY13E BV. Neutral.

Source : Equity Bulls

Keywords