Buy Bank of Baroda; target of Rs 344: Anand Rathi

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Accelerating loan growth: 18.5% y/y, led by RAM and overseas advances, with domestic corporate growth at 6.3% y/y.
  • Improving asset quality: Gross slippages at 82bps, net slippages at 17bps, and GNPA/NNPA ratios at 1.78%/0.37%.
  • Stable NIM: 2.74%, with expectations of moving towards the upper end of the 2.75-2.95% guided range.
  • Prudential buffers: Rs16bn of provisioning created, taking reported provisions to 55bps, providing an ECL cushion.

Thesis Validation Checklist

  • Credit growth: Remain broadly in line with the system.
  • Profitability: Remain steady, aided by healthy operating performance and improving asset quality.
  • Asset quality: Monitor gross and net slippages, GNPA/NNPA ratios, and SMA-1/2.
  • NIM: Track the movement towards the upper end of the guided range. Watch for signals such as loan growth, deposit growth, and fee income recovery to validate the thesis over the next ~12 months.