Emkay Global Financial Services has recommended `Accumulate` on Bank of Baroda (BOB) with a price target of Rs 950 as against the current market price (CMP) of Rs 790 in its report dated Jan. 25, 2012. The broking house gave the following rationale:
> BOB`s (Q,N,C,F)* Q3FY12 NII at Rs 26.6 billion / PAT at Rs 12.9 billion is inline with our estimates. Despite improved recoveries, steep rise in gross slippages (1.5% of loans) warranted higher provisioning.
> Problem loans (GNPA + restructured loan portfolio) now account for 7% of total book. Global NIM at 3.0% (-7bps qoq) was aided by 27bps qoq improvement in international NIM.
> Growth in balance sheet remains satisfactory at 6% qoq (26% yoy). Domestic book witnessed steady 18%+ yoy growth. Adjusted for INR dep., int. book grew by 22%+ yoy levels.
> Deterioration in asset quality was compensated by higher provisioning. Given healthy capital and superior return ratios, we drive comfort at current valuations. `Accumulate`.
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