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Yes Securities Report
We maintain ‘Buy' on Bank of Baroda with a revised price target of Rs 360: We value the bank at 1.2 times FY26 price/book value for an FY25E/26E return on equity profile of 15.8/16.0%. We assign a value of Rs 20.7 per share to the subsidiaries, based on SOTP.
Asset quality - There was a sequential fall in slippages and management has improved its credit cost guidance:
Gross non-performing asset additions amounted to Rs 30.18 billion for Q1 FY25, translating to an annualized slippage ratio of 1.1%. The bank has maintained its guidance for a slippage ratio of 1-1.25% for FY25. Recoveries and upgrades amounted to Rs 16.57 billion for Q1 FY25 and the recovery from TWO was at Rs 5.54 billion for the quarter.
The bank expects a total recovery of Rs 100 billion including NPA recoveries and recoveries from written-off accounts in FY25. Provisions were Rs 10.11 billion, down by -22.4% QoQ, translating to calculated annualised credit cost of 38bps.
The provision was lower sequentially as the bank has received Rs 3 billion on loans which were having government guarantee. The bank has reduced its credit cost guidance from 1% to 0.75% in FY25.
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