Tuesday, Jan 25, 2022
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Bank of Baroda Raises Rs 1,997 Crore Via Basel III-Compliant Bonds. Should You Buy?

The bank has received total bid amount of Rs 5,308 crore, out of which the issuance was finalised for Rs 1,997 crore at 7.95 per cent (per annum), BoB said in a regulatory filing.

Bank of Baroda Raises Rs 1,997 Crore Via Basel III-Compliant Bonds. Should You Buy?
Bank of Baroda Raises Rs 1,997 Crore Via Basel III-Compliant Bonds. Should You Buy? -

State-owned Bank of Baroda on Friday said it has raised Rs 1,997 crore by issuing Basel III-compliant bonds.

The bank had come out with a Rs 2,000 crore issue of additional tier-I bonds on November 24.

"The bank has received total bid amount of Rs 5,308 crore, out of which the issuance was finalised for Rs 1,997 crore at 7.95 per cent (per annum)," BoB said in a regulatory filing.

The bank said it issued a total of 1,997 bonds of Rs 1 crore each under this issue to a total of 21 allottees.

To comply with Basel-III Capital Regulations, banks need to improve and strengthen their capital planning processes.

These norms are being implemented to mitigate concerns on potential stresses on asset quality and consequential impact on performance and profitability of banks.

The stock of Bank of Baroda traded 3.33 per cent lower at Rs 89.90 apiece on BSE.

With this development, investors must be keen to understand whether they should buy, sell or hold the shares. Here is what brokerages housed had said a few days back:

CLSA

It has maintained a buy call on the stock and has raised the target price to Rs 140 per share. The bank is beneficiary of the corporate recovery cycle, feels the brokerage. It expects credit costs to normalise to 120- 125 bps by FY23 and expect 10.8-11 per cent RoE by FY23/24.

Motilal Oswal

Bank Of Baroda reported a strong earnings performance, supported by lower provisions and higher other income, even as NII remained under pressure. Domestic NIM moderated by 22bp QoQ to 2.9 per cent.

The brokerage house has increasd the bank’s FY22E/FY23E earnings estimate sharply by 39 per cent/14 per cent and expect an RoA/RoE of 0.7 per cent/10.9 per cent by FY23E. It maintains a buy rating with a revised target price of Rs 130 per share.

LKP Research

The investment firm expects BoB to post a ROA/ROE of 0.6 per cent/8.7 per cent by FY23E led by stable balance sheet growth along with higher PCR and steady asset quality.

It says it values the standalone bank at PBV of 0.9xFY23E Adj. BVPS of Rs 137 to arrive at a price target of Rs 124 (revised upwards).

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