Mumbai: CLSA has upgraded to buy from outperform and raised target price to Rs 125 from Rs 80 owing to a benign corporate credit cycle ahead.
“Unlike
, BOB has lost market share over time and may not qualify as a structural story. However, cyclically, like all corporate banks, corporate NPAs contributed 75% of slippages/provisions in the past five years, and that cycle is finally turning,” said CLSA
The brokerage said its preference for SBI and
over Bank of Baroda remains given its higher asset quality certainty and more structural drivers.
CLSA said Bank of Baroda’s CET-1 ratio will improve to 10% with the recent capital raise.
“With an improvement in core profitability and moderate growth expectations, we expect BOB CET-1 to organically accrete over FY22-23, which could reduce the risk of dilutive capital raise,” said CLSA.
