Nomura upgrades Bank of Baroda to buy
MUMBAI: Nomura has upgraded shares of Bank of Baroda to ‘buy’ from ‘neutral’ citing early recognition of bad loan stress and better pre-provision operating profit outlook than peers.
Maintaining a target price of Rs 200, the brokerage said the high NPA coverage of 58 per cent implies a lower P&L hit in FY18 from higher provisions for Reserve Bank of India’s identified large NPAs.
“We expect +10 per cent loan growth for BOB over FY17-19F as the bank has already consolidated its loan book in the past two years and Tier-1 at ~10 per cent is better than most peers,” said Nomura.
Nomura said Bank of Baroda’s NPA coverage is the highest among corporate banks and provides comfort.
“Unlike most corporate bank peers, we expect BOB’s NIMs to improve as the weak credit demand should be offset by lower interest reversals and higher domestic loan mix,” said Nomura.
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Via:: Economic Times – Stocks