Bank of Baroda- Buy at Rs 177.5 and add on dips to Rs 157 - Rs 166 for Target Rs 192 in 1 quarter ::HDFC Sec, report

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During Q3FY15, BOB reported NII of Rs 3286.1 cr, up 7.5% y-o-y and down 3.4% q-o-q and Net Profits of Rs 334 cr, down 68.1% y-o-y and 69.8% q-o-q. NIMs have come down from 2.37% in Q3FY14 and 2.4% in Q2FY15 to 2.2% in Q3FY15. Overall advances have gone up 11.7% y-o-y to Rs 393631 cr. CASA stands at 32.4% in Q3FY15 compared to 31.9% in Q2FY15. Asset quality deteriorated with NNPAs % increasing from 1.74% in Q2FY15 to 2.11% in Q3FY15. Slippages were higher at Rs 3042 cr while restructuring has also gone up to Rs 1598 cr. The profitability of the bank was hit by one-time income tax payment of Rs 413 cr in its Dubai operations and higher provisions (up 65.7% y-o-y) on account of weakening of asset quality. The bank has fully provided for tax issue in the Dubai operations. But, the bank expects asset quality stress to continue in Q4FY15. Globally, Restructured Standard Advances (at Rs 23,099 cr) stood at 5.98% of Total Standard Advances. NIMs steady at 2.2% Global NIMs of BOB have come down to 2.2% in Q3FY15 compared to 2.37% in Q3FY14 and 2.4% in Q2FY15. Domestic NIMs were almost flattish at 2.92% compared to 2.95% in Q3FY14 and 3.02% in Q2FY15. Overseas NIMs have lagged behind at 0.93% in Q3FY15 compared to 1.18% in Q3FY14 and 1.16% in Q2FY15. Domestic Yields have improved 4 bps y-o-y to 11.01% while costs of deposits have gone up marginally by 2 bps to 7.12%. Overall Interest spreads have come down to 2.91% from 3.06% in Q3FY14 as Global yields deteriorated from 8.3% to 8.09% y-o-y.

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