ULJK Research
Target: ₹65
CMP: ₹53.97
Bank of Maharashtra (BOM) posted a notable 15.4/0.3 per cent y-o-y/q-o-q growth in NII, reaching ₹2,810 crore in Q2-FY25. Despite a 18 bps rise in cost of funds (COF), they achieved higher yields on advances, increasing by 25 bps. This resulted in a 9 bps improvement in NIMs, reaching 3.98 per cent in Q2.
Asset quality improved sequentially with GNPA falling by 35 bps q-o-q to 1.89 per cent and NPA falling by 3 bps q-o-q to 0.20 per cent. This reduction was also due to recoveries of ₹213 crore in Q1. Around ₹15,000 crore from the NCLT book is expected to be recoverable this financial year, with typical recovery rates of 30-35 per cent.
We continue to remain Bullish on BOM with a Target Price of ₹65 on FY26 BVPS of ₹37 with a P/BV multiple of 1.76x. BOM’s co-lending portfolio in gold loans is expanding through partnerships and strategic branch expansion. Despite challenges in the broader lending landscape, BOM’s focus on rural markets and strong growth in retail, agriculture, and MSME loans positions it for continued growth.