Nomura Financial Advisory and Securities has maintained 'Buy' on Bank of Baroda (BoB) with target price of Rs 210 with current market price (CMP) of Rs 170 in its report.

Commenting on the investment rationale, Nomura said, ''4QFY15 PAT miss (Rs 5.98 billion vs our forecast of Rs 8.6 billion) masks the relief in asset quality especially after weak expectations set in by PNB's (PBN IN, Neutral) results. While total impairments at Rs 57 billion were line with our expectation; NPA accretion was 50% lower q-q highlighting BOB's better underwriting vs peers.

4Q performance was certainly a relief but management acknowledged asset quality challenges for the system/BOB from lumpy metal/Infra and refrained from extrapolating 4QFY15 slippages. While asset quality improvement is likely to be only gradual, BOB's underwriting has been better than peers; hence we maintain our Buy rating.

We cut our FY16/17F EPS/PAT by 9/10% and our TP by 5%, driven by slower growth and lower margins especially in the overseas business. We expect ROEs to inch up to 14% by FY17F and hence consider our 1.05x FY17F book fair (BVPS of Rs 203). While it still seems early to extrapolate the 4QFY15 slippage trend, our Buy rating is driven by BOB's relatively better corporate underwriting.''

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