EUR 120.00 For Business Accounts Only

MOSL: Morning India (10/August/21): 1. Bank of Baroda (NII growth recovers sharply; collection efficiency stable QoQ); 2. Shree Cement; 3. Bharat Electronics; 4. Voltas; 5. MRF; 6. Gujarat State Petronet; 7. In

MOrning India (10/August/21):

 

Today’s top research idea

Bank of Baroda: NII growth recovers sharply; collection efficiency stable QoQ

• BOB reported a strong earnings performance, supported by a healthy core operating performance, despite sluggish business trends. Domestic NIM improved sharply by 39bp QoQ to 3.12%.
• Asset quality trends were stable sequentially in a challenging environment, with fresh slippage at INR51.3b (annualized slippage rate of 3.1%). However, higher write-offs and upgrades resulted in stable asset quality trends - the GNPA/NNPA ratio declined 1bp/6bp QoQ, while PCR was broadly stable at ~68%. Also, total SMA 1/2 (>INR50m) declined to ~2.68%, while the restructured book stood at 3.2% of loans. Collection efficiency (ex-Agri) was stable QoQ at 93%, better vis-à-vis many other peers.
• The bank expects growth to pick up, led by retail segments, while corporate growth would see gradual recovery as the economic situation normalizes. We increase our earnings estimates by 47%/22% for FY22/FY23E and estimate RoA/RoE of 0.7%/10.3% by FY23E. Therefore, we upgrade our rating to BUY, with revised TP of INR100 (0.7x FY23E ABV).

Piping hot news

E-way bill generation maintains momentum in August

• Daily e-way bill generation for goods transportation under the Goods and Services Tax (GST) system came in at 19.5 lakh in the first eight days of August, 1.3% higher than the average for the first 11 days of July, indicating continued momentum in economic recovery. However, the daily average e-way bills for the first eight days of August were 5.8% lower than the daily average for the full month of July. Going by the trend, the daily average is expected to pick up in August.