EUR 120.00 For Business Accounts Only

MOSL: Morning India (26/July/19): 1. Bank of Baroda (Earnings in line); 2. Bajaj Finance; 3. Tata Motors; 4. Bharti Infratel; 5. Ambuja Cement; 6. Biocon; 7. Shriram Transport Fin.; 8. Oberoi Realty; 9. AU Sma

MOrning India (26/July/19): 1. Bank of Baroda (Earnings in line); 2. Bajaj Finance; 3. Tata Motors; 4. Bharti Infratel; 5. Ambuja Cement; 6. Biocon; 7. Shriram Transport Fin.; 8. Oberoi Realty; 9. AU Small Finance; 10. Mphasis

 

Today’s top research Idea

Bank of Baroda: Earnings in line; Asset quality to recover only gradually

• BOB reported PAT of INR7.1b helped by lower provisions and treasury gains of INR3.4b (+124% YoY). NII increased 3% YoY affected by slower domestic loan growth. Global NIMs declined to 2.62% (-13bp QoQ).
• Domestic loan growth stood at 5.2% YoY to INR5.3t. However, retail loan growth remains robust at 20.5%. Total deposits grew 6.4% YoY to INR8.9t while CASA ratio declined 71bp QoQ to 36.5%.
• Fresh slippages stood elevated at INR55.8b (INR4.37b due to IL&FS group). The GNPA/NNPA ratio increased 26bp/30bp QoQ to 10.28%/3.95%. PCR including technical write-off stood at 77.3%.

BOB has reported modest first quarter results post-merger, reflecting tepid loan growth and slight moderation in margins. We expect fresh slippages to be slightly higher in FY20 (2.7%) and estimate credit cost to remain elevated at 2.0%/1.4% in FY20/FY21. We maintain Buy with a TP of INR145 (1.0x FY21E ABV).

 

Piping hot news

CDPQ pulls out of road deal with Essel

Canada’s Caisse de dépôt et placement du Québec (CDPQ) has dropped its plan to buy three road projects from cash-strapped Essel Infraprojects Ltd, three people aware of the development said, requesting anonymity. Essel is now trying to sell these assets to a joint venture platform between India’s National Investment and Infrastructure Fund (NIIF) and Roadis, the people cited above said. Roadis is an infrastructure investor owned by PSP Investments, another Canadian pension fund manager.