BoB Q2 numbers pathetic; expect further downside: Chokkalingam

In a chat with ET Now, G Chokkalingam, Equinomics Research talks about the second quarter earnings of Bank of Baroda.

ET Now: This is getting as bad as it gets. Here I am talking about BoB.

G Chokkalingam: It is not the right word. The numbers were really pathetic. Provisions are up by 112 per cent on year-on-year (YoY). Even as the net NPA has doubled to 3.08 per cent from 1.74 per cent in the year ago quarter, even as the company has made such huge provisions for bad assets. Something has miserably gone wrong; may be some major accounts may have gone bad. It is really pathetic.

ET Now: Is the damage in the price or do you believe there could be more in store for BoB?
G Chokkalingam: It might have been priced, but then why would an investor want to buy a stock like this? I mean you do not know when profit comes down by 88 per cent and still...

ET Now: I am asking if you think that there could be more downside. I am not talking about buying at all. So you think it can go down further?

G Chokkalingam: Certainly, that is what I am trying to say. Despite increase in provisions two times, gross NPAs now have climbed up to 5.56 per cent from 3.3 per cent. It means that lot more provisions have to be made, even for the existing bad assets. So in case, new bad assets also come in, then there is going to be further serious erosion in the market cap of this bank. So therefore, there is a possibility of further downfall.