On a strong footing…
Bank of Baroda (BOB) is the third largest public sector bank (PSB) in India in terms of asset size and the fourth largest bank in terms of branches. The bank has strong domestic presence with 5,382 branches and 10,404 ATM’s across the country. BOB is also known as the international bank of India as it has one of the largest branch networks in foreign countries. BOB has presence in over 27 countries with 139 overseas branches/offices, which generates close to 27% of its total business.
View & Valuation
Although we expect consolidation in the loan book to continue for the next couple of quarters, we continue to like the bank owing to improvement in the bank’s core operating performance, able management and higher provision coverage ratio. Further, the bank has enough room to achieve higher business growth as it is well capitalized among PSU banks. Overall, BOB is on the right track. We recommend BUY rating with a TP of Rs195 valuing the bank at P/ABV of 1.3x for FY19E.
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