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Slippages continue to remain higher |
REDUCE
CMP: Rs 537 Target Price: Rs 450
n BOI’s Q2FY11 NII at Rs17.8bn in line with expectations stable NIMs and 4.3% qoq growth in gross advances. PAT at Rs6.2bn on expected lines
n Slippages remain high at Rs8.2bn for the quarter; 1.8% annualised vs. 2.5% for FY10. We estimate FY11E slippage at Rs24bn
n The NPA profile still remains uncomfortable with net NPAs of 1.1% (13% NNPA/networth) and provision cover of 57.5%
n Expect to underperform peers with no significant discount in valuation despite lower asset quality. Valuations at 2.1x FY11E/1.7x FY12E ABV. Continue REDUCE rating
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