ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 29 July 2019 | 1

Current Reco : BUY 1QFY20 RESULT REVIEW

Previous Reco
CMP
: BUY
: INR113
Bank of Baroda
Target Price : INR130 No negative surprises on NPLs but integration could
Potential Return : 15% delay earning normalization
https://www.euromoney.com/Brokers
Asiamoney Brokers’ Poll 2019
https://www.euromoney.com/Brokers BoB reported first quarter of merged numbers and no negative surprise on
https://www.euromoney.com/Brokers
P Vote for ANTIQUE
https://www.euromoney.com/Brokers
https://www.euromoney.com/Brokers
NPLs was a relief, however weakness was visible in core performance (core
https://www.euromoney.com/Brokers
https://www.euromoney.com/Brokers
Voting closes on 16th August PPP to average assets of 1.4% vs. 1.6% for standalone BoB) and stress flow
https://www.euromoney.com/Brokers
from VJTBK and DBNK was high (annualized slippage ratio estimated of
~6% and watch-list of 3.9% of their books) and granular. This is likely to
Sohail Halai lead to slower than expected improvement in return ratios and also call for
+91 22 4031 3425 capital infusion (CET 1 of 8.5%) in FY20. We expect BOB's RoAs to improve to
sohail.halai@antiquelimited.com
0.7% by FY21 and RoEs (post capital raise) to be in high single to low double
digits. Q1 earnings gave a broad sense on the earnings profile of the merged
financials way ahead and next milestone would be to see certainty in
Market data leadership; this is important in our view as would enable the bank to tide
Sensex : 37,883 over the merger related challenges without major mishaps. We continue to
Sector : BANKS maintain Buy on the stock as valuations are inexpensive at 0.6x FY21 BV.
Market Cap (INRbn) : 432.9
P&L Performance
Market Cap (USDbn) : 6.271
O/S Shares (m) : 3,846.7 n NII = 3% YoY
52-wk HI/LO (INR) : 158/91
n Global NIMs = 2.6% vs. 2.8% in 4QFY19 and 2.9% for BoB standalone
Avg Daily Vol ('000) : 22,367
Bloomberg : BOB IN l Domestic NIMs = 2.7% vs. core NIMs of 3% in 4QFY19 for BoB
Source: Bloomberg
n Fees was up 4% QoQ and core PPP was flat YoY
Valuation
FY19 FY20e FY21e l Management mentioned it has harmonized VJTBK and DBNK's AS-15 related
EPS (INR) 1.6 13.3 21.3 assumption at the time of merger.
BVPS (INR) 148.4 158.4 174.7
PE (x) 74.6 8.5 5.3
n Core PPP to average assets = 1.4% vs. ~1.6%
P/BV (x) 0.8 0.7 0.6 n PAT of INR7.1bn
NIM (%) 2.7 2.7 2.9
Source: Bloomberg Asset Quality performance in-line; stress from DBNK and VJTBK remained at a high level
Returns (%) n GNPL and NNPL were steady QoQ at 10.3% and ~4% respectively and provision
1m 3m 6m 12m coverage ratio (including technical write-offs) was stable QoQ at 77%.
Absolute (7) (9) 2 (19)
n Slippages for the quarter were INR66.2bn vs. INR73bn for 4QFY19.
Relative (3) (6) (3) (21)
Source: Bloomberg l Based on the disclosure, fresh slippage for BOB was INR32bn (stable QoQ) and
Shareholding pattern slippage ratio from the merged entity still remains high at 5.8% of their respective
loan book.
Promoters : 69%
Public : 31% l DBNK and VJTBK book forms ~25% of the gross loan book of which 35% is rated BB
Others : 0% and below and may lead to higher slippages.
Source: Bloomberg
n Watch-list of the merged entity stood at INR165bn (2.6% of loans) within which BoB's
Price performance vs Nifty watch-list is stable QoQ at INR100bn (2% of loans), implying ~3.8% of DBNK and
120 VJTBK book is still under the watch-list. Management clarified all the stress group exposures
100 are included in the watch-list.
80 n SMA 1 and SMA 2 stood at 2.1% and 1.5% of loans respectively.
60
Jul-18 Nov-18 Mar-19 Jul-19
n Bank has some large accounts which are expected to get recovered in the near term and
Bank of Baroda NIFTY
based on our read of IBC exposure we believe write-back from these could be INR16-
18bn.
Source: Bloomberg, Indexed to 100
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 29 July 2019 | 2

Quarterly Performance
BoB Standalone
(INR million) 1QFY19 4QFY19 1QFY20 QoQ YoY 1QFY19 4QFY19
NII 63,310 67,910 64,981 -4 3 43,811 50,670
NIMs (%) 2.7 2.8 2.6 -13 -7 2.7 2.9
Fees 13,170 16,810 13,746 -18 4 9,458 12,394
Core Revenue 76,480 84,720 78,727 -7 3 53,269 63,064
Core revenue to average assets 3.3 2.9 3.0 3.3
Operating Expenses 39,480 61,550 41,375 -33 5 25,233 31,766
Core PPoP 37,000 23,170 37,352 61 1 28,036 31,298
Core PPoP to average assets 0.9 1.4 1.6 1.6
Trading & Others 4,180 8,650 5,410 -37 29 2,020 7,310
PPoP 41,180 31,820 42,762 34 4 30,056 38,608
Provisions 39,440 103,410 32,849 -68 -17 21,656 53,993
Provisions for NPL 35,530 102,570 31,680 -69 -11 17,600 55,500
PBT 1,740 -71,590 9,913 -114 470 8,400 -15,385
Tax 2,230 17,160 2,815 -84 26 3,117 -5,471
PAT -490 -88,750 7,099 5,283 -9,914

GNPL 793,190 699,240 697,140 0 -12 558,748 482,328

NNPL 339,910 237,948 250,303 5 -26 223,841 156,095
GNPL (%) 12.4 10.0 10.3 26 -210 12.5 9.6
NNPL (%) 5.7 3.7 4.0 30 -176 5.4 3.3
PCR (%) 57.1 66.0 64.1 -187 695 59.9 67.6
PCR (including w/off, %) 77.0 77.3 34 7,734 69.1 78.7
Watch-list 165,010 86,000 104,100
% of Loans 2.6 2.1 2.2
SMA 1 146,561 134,234 60,105 57,665
% of Loans 2.2 2.1 1.5 1.2
SMA 2 90,542 93,711 38,965 55,321
% of Loans 1.4 1.5 0.9 1.2
Net Stress Loans (NNPL + watch-list) 415,313 309,841 260,195
% of Loans 6.6 7.5 5.6
% of NW 65.8 70.2 51.0
Loans 5,948,960 6,513,840 6,331,809 -3 6 4,145,173 4,688,187
Deposits 8,418,300 9,151,591 8,955,420 -2 6 5,814,839 6,386,897
CASA 2,867,370 3,113,680 3,015,720 -3 5 2,065,450 2,237,940
Domestic CASA ratio (%) 37.2 37.3 36.6 40.8 40.2
Souce: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 29 July 2019 | 3

Financials
Profit and loss account (INRm) Capital Adequacy Ratio
Year-ended March 31 FY17 FY18 FY19 FY20e FY21e Year-ended March 31 FY17 FY18 FY19 FY20e FY21e
Interest Income 4,21,999 4,36,485 4,99,741 7,72,480 8,54,923 RWA (INRm) 39,95,657 40,74,242 41,03,083 62,29,617 69,91,160

Interest Expense 2,86,865 2,81,268 3,12,903 5,00,532 5,40,222 Tier I (%) 9.9 10.5 11.6 9.3 9.2

Net Interest Income 1,35,134 1,55,218 1,86,838 2,71,949 3,14,700 Tier II (%) 2.3 2.4 1.9 1.8 1.6

% NII Growth 6.1 14.9 20.4 45.6 15.7 Total CAR (%) 12.2 12.9 13.4 11.2 10.9

Fee Income 15,660 17,850 19,890 22,631 24,894

Non-interest income 67,581 66,572 60,910 86,032 91,674 Business Ratios
Net Revenue 2,02,715 2,21,789 2,47,748 3,57,981 4,06,374 Year-ended March 31 FY17 FY18 FY19 FY20e FY21e
Employees Expenses 46,378 46,069 50,391 83,166 91,483 Credit / Deposit(%) 63.7 72.3 73.4 69.8 71.1
Other Op. Expenses 46,586 55,665 62,489 94,193 1,05,496 Investment / Deposit (%) 21.5 27.6 28.5 28.4 28.9
Operating Profit 1,09,751 1,20,056 1,34,868 1,80,622 2,09,396 CASA (%) 32.2 35.8 35.0 32.2 32.1
% OP Growth 24.5 9.4 12.3 33.9 15.9 RoaA (%) 0.2 (0.3) 0.1 0.5 0.7
Tax 10,896 (3,589) 2,646 19,963 35,134 Core RoE (%) 4.0 (6.6) 1.1 9.1 12.8
Total Provisions 85,024 1,47,963 1,27,887 1,09,327 92,282 Dividend Yield (%) 1.0 - - - 3.8
Net Profit 13,831 (24,318) 4,335 51,332 81,980
Key assumptions
Balance sheet (INRm) Year-ended March 31 FY17 FY18 FY19 FY20e FY21e
Year-ended March 31 FY17 FY18 FY19 FY20e FY21e Deposit
Capital 4,621 5,304 5,304 7,706 7,706 Deposit growth (%) 4.8 (1.7) 8.0 53.3 10.0
Reserves and Surplus 3,98,412 4,28,644 4,54,107 6,26,840 6,89,718 Cost of deposits (%) 4.6 4.4 4.5 4.8 4.7
Deposits 60,16,752 59,13,148 63,86,897 97,92,202 1,07,71,422 Advances
Borrowings 3,06,114 6,25,720 7,22,433 7,72,943 8,88,885 Advances growth (%) (0.1) 11.5 9.7 45.9 12.0
Other Liabilities & Provisions 2,22,856 2,27,182 2,41,133 3,36,636 3,53,468 Yield on advances (%) 7.2 7.2 7.7 8.2 8.4
Total liabilities 69,48,754 71,99,998 78,09,874 1,15,36,327 1,27,11,199 Investments
Investments growth (%) 7.6 25.9 11.7 52.6 12.0
Cash & Balances with RBI 2,27,802 2,26,996 2,66,617 5,49,176 4,64,349 Yield on investments (%) 8.5 7.1 7.4 6.9 6.9
Bal. with banks/ call money 12,76,897 7,01,977 6,25,679 6,86,734 7,57,920
Investment 12,96,305 16,31,845 18,22,981 27,81,797 31,15,613
Earnings Ratios
Loans and advances 38,32,592 42,74,318 46,88,187 68,39,532 76,60,276
Year-ended March 31 FY17 FY18 FY19 FY20e FY21e
Interest Inc. / Avg.assets (%) 6.2 6.2 6.7 8.0 7.1
Fixed Assets 57,584 53,674 69,903 1,14,915 1,20,660
Interest Exp./ Avg. assets (%) 4.2 4.0 4.2 5.2 4.5
Other Assets 2,57,574 3,11,186 3,36,507 5,64,173 5,92,381
NIM (%) 2.2 2.4 2.7 2.7 2.9
Total assets 69,48,754 71,99,998 78,09,874 1,15,36,327 1,27,11,199
Int. exp/ Int earned (%) 68.0 64.4 62.6 64.8 63.2
Asset Quality Oth. Inc./ Tot. Inc. (%) 33.3 30.0 24.6 24.0 22.6
Year-ended March 31 FY17 FY18 FY19 FY20e FY21e Staff exp/Total opt. exp (%) 49.9 45.3 44.6 46.9 46.4
Gross NPA (INRm) 4,27,190 5,64,807 4,82,337 6,76,361 6,65,516 Cost/ Income Ratio (%) 45.9 45.9 45.6 49.5 48.5
Gross NPA (%) 10.47 12.27 9.62 9.29 8.21 Total Prov./ Operating Profit (%) 77.5 123.2 94.8 60.5 44.1
Net NPA (INRm) 1,80,802 2,34,827 1,56,097 2,33,243 2,15,398 Loan loss prov./Avg. loans (bps) 2.1 3.5 2.7 1.6 1.2
Net NPA (%) 4.72 5.49 3.33 3.41 2.81
% coverage of NPA 57.7 58.4 67.6 65.5 67.6
Per share data (INR)
Delinquencies (%) 3.5 6.3 3.2 3.5 2.0
Year-ended March 31 FY17 FY18 FY19 FY20e FY21e
Book value per share (INR) 151.6 143.9 148.4 158.4 174.7
Source: Company, Antique; * Standalone BoB till FY19. Merged numbers for FY20-21.
Adj. BVPS (INR) 100.8 86.3 110.1 119.0 138.3
Price/ Book value 0.8 0.8 0.8 0.7 0.6
EPS(INR) 6.0 (9.2) 1.6 13.3 21.3
P/E Ratio 20.4 (13.3) 74.6 8.5 5.3
DPS 1.2 - - - 4.3

Source: Company Antique; * Standalone BoB till FY19. Merged numbers for FY20-21.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 29 July 2019 | 4

Important Disclaimer:

This report has been prepared by Antique Stock Broking Limited (hereinafter referred to as ASBL) to provide information about the company(ies) and/sector(s), if any, covered in the report and may be distributed
by it and/or its affiliated company(ies).

ASBL is a Stock Broker having SEBI Registration No. INZ000001131 and Depository Participant having SEBI Registration No. IN-DP-CDSL-726-2014 registered with and regulated by Securities & Exchange Board
of India.

ASBL and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group.

This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement
to invest in securities or other investments and ASBL is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your general information and should
not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs
of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice.
The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future
performance, future returns are not guaranteed and a loss of original capital may occur.

We and our affiliates have investment banking and other business relationships with a some companies covered by our Research Department. Our research professionals may provide input into our investment banking
and other business selection processes. Investors should assume that ASBL and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of
this material and that the research professionals who were involved in preparing this material may educate investors on investments in such business. The research professionals responsible for the preparation of
this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and interpreting information. Our research professionals are paid on the profitability
of ASBL which may include earnings from investment banking and other business.

ASBL generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.
Additionally, ASBL generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders,
and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary
trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing
among other things, may give rise to real or potential conflicts of interest. ASBL and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position
in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation
or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with
respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations
made by the analyst(s) are completely independent of the views of the affiliates of ASBL even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report

Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and,
as such, may not match with a report on a company's fundamental analysis. In addition ASBL has different business segments / Divisions with independent research separated by Chinese walls catering to different
set of customers having various objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets.

Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt ASBL or any of its affiliates or
employees from, any and all responsibility/liability arising from such misuse and agrees not to hold ASBL or any of its affiliates or employees responsible for any such misuse and further agrees to hold ASBL or
any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained
herein is based on publicly available data or other sources believed to be reliable. Any statements contained in this report attributed to a third party represent ASBL's interpretation of the data, information and/
or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete
statement or summary of the securities, markets or developments referred to in the document. While we would endeavor to update the information herein on reasonable basis, ASBL and/or its affiliates are under
no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent ASBL and/or its affiliates from doing so. ASBL or any of its affiliates or employees shall not
be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. ASBL or any of its affiliates or employees do not
provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose,
and non-infringement. The recipients of this report should rely on their own investigations.

This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based
on this report or for any necessary explanation of its contents.

ASBL and it's associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received
any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months.

ASBL and it's associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.

Subject Company may have been a client of ASBL or its associates during twelve months preceding the date of distribution of the research report

ASBL and/or its affiliates and/or employees and /or relatives may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research
in the securities mentioned in this report. To enhance transparency, ASBL has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed
in the report.

There are no material disciplinary action that been taken by any regulatory authority impacting equity research analysis activities

Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be
directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation
of ASBL research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues

Disclosure of Interest Statement Companies where there is interest

l Analyst ownership of the stock - No

l Served as an officer, director or employee - No

Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to
law, regulation or which would subject ASBL & its group companies to registration or licensing requirements within such jurisdictions.

For U.S. persons only: This research report is a product of Antique Stock Broking Limited, which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing
the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-
dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject
company, public appearances and trading securities held by a research analyst account. This report is intended for distribution by Antique Stock Broking Limited only to "Major Institutional Investors" as defined
by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient
of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted
onward to any U.S. person, which is not the Major Institutional Investor. In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order
to conduct certain business with Major Institutional Investors, Antique Stock Broking Limited has entered into a chaperoning agreement with a U.S. registered broker-dealer, Marco Polo Securities Inc. ("Marco Polo").
Transactions in securities discussed in this research report should be effected through Marco Polo or another U.S. registered broker dealer.

SEBI Registration Number: INH000001089 as per SEBI (Research Analysts) Regulations, 2014.

CIN: U67120MH1994PLC079444

Antique Stock Broking Limited

20th Floor, A Wing, Naman Midtown
Senapati Bapat Marg, Elphinstone (West)
Mumbai 400013
Tel. : +91 22 4031 3444 • Fax : +91 22 4031 3445
www.antiquelimited.com