Buy Bank of Baroda; target of Rs 300: Emkay Global Financial

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • BoB's RAM segment and overseas portfolio, aided by FCNR(B) leverage, drove 18.5% yoy credit growth, with the bank upgrading its FY27 credit growth guidance to 13-15%.
  • The bank's NIM moderated to 2.74%, with management retaining FY27 guidance of 2.75-2.95%, expecting an improvement in 2HFY27 driven by repo-linked loan repricing and corporate loan repricing.
  • Asset quality improved qoq, with the bank building prudential buffers through additional provisions of Rs16bn, while remaining cautious on gold loan growth.

Thesis Validation Checklist

  • Investors should watch for BoB's ability to maintain its upgraded credit growth guidance and NIM expansion in 2HFY27.
  • The bank's ability to manage asset quality, particularly in the gold loan portfolio, will be crucial.
  • Deployment of stored liquidity from FCNR(B) mobilization and its impact on margins and credit growth will be important to monitor.
  • The bank's ROA is expected to remain above 1% in 2Q-4QFY27, supporting the expectation of achieving around 1% ROA in FY27.