Bank of Baroda - Asset Quality Steady; Remain Watchful On The Pace Of Deposit Mobilisation: Motilal Oswal

Motilal Oswal Report

Bank of Baroda clocked ~17% compound annual growth rate in loan growth over FY22-FY24 as it deployed excess liquidity on the balance sheet. Its credit-deposit ratio, thus, increased ~600 basis points over the past two years to 80.3%. We estimate advances growth to moderate to 11.5% CAGR over FY24-FY27, led by faster growth in retail, agri and MSME segments.

Net interest margin is expected to remain rangebound in the near term, while potential turn in the rate-cycle will likely drive slight contraction in margins.

Asset quality remains robust and we estimate continued improvement in gross non-performing asset ratio, with credit cost staying well within the guided range (<0.75%).

We estimate earnings to grow at a modest ~10% CAGR over FY24-FY27, while return on asset remains steady at 1.1%. We reiterate Buy with a target price of Rs 290 (premised on 1.1 times FY26E adjusted book value).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit. 

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.