Citigroup puts 'buy' on Bank of Baroda

Citigroup has recommended Bank of Baroda as a ‘Buy’ and set a target price of Rs 842. BoB has made visible improvements in key operating parameters and has shown consistent growth and profitability over the last 24-36 months. Loan growth, which historically lagged the industry, has been better for the most part, margins have sustained at close to 3%, and asset quality has continued to remain under control, despite macro challenges.

Its valuations have also corrected recently, and BoB now trades below its historical median valuations and also at an attractive discount to some of the leading public sector banks. Structurally, BoB should trade at par with its larger peers given its healthy fundamentals and would take this recent price correction as an opportunity to enter the stock.