ACTUAL LOSS Q3 Rs 4792 Cr (not 1408Cr)

BOI: Downgraded by S&P,ICRA & CRISIL


TP:Rs79FebEXP,Rs 65MarchExp,Rs53 MayExp

As per report of Motilal Oswal Securities " MOST PSBs are STILL
TRADING at EXPENSIVE VALUATIONS".

Our take: In PSB space, BOI is amongst the most EXPENSIVE stock:

1. BOI has declared LOSS of Rs 1408 crores for Q3. However, this Loss
is arrived at after onetime WRITEBACK of Rs 3384 crores. Thus ACTUAL
LOSS is whopping Rs 4792 crores for Q3 alone. Perhaps HIGHEST
quarterly loss in PSB space

2. BOI has been downgraded by various rating agencies as BOI is set to
report worse nos for Q4 and there is no near term visibility in
improvement of operational performance and BOI should report LOSS FOR
FY17 as well.

Q3: ALL NEGATIVES:

a) Actual Loss Rs 4793 cr.
b)NPA 9.18%
c)Gross NPA   36519Cr
d)Net NPA       19979Cr
e)Restructures Assets 31576Cr
f) Return on Assets:(-)0.93%. If RoA falls below 0.25%, RBI can start clampdown
g)Operating Profit for 9m 4571 cr as against 6061cr, steep fall
h)FRESH SLIPPAGE Rs 22592Cr
i)COST to INCOME Ratio 56%- perhaps highest in banking industry
j) 17270 Cr may slip into NPA in coming quarters (out of restructured assets)
k)NPAs worth 1956 cr already written off in 9months

There is sharp deterioration in asset quality due to higher stress
than anticipated and higher exposure to stressed sectors like Steel,
Power.

Q4 NPA can be 11% and NPAs will not come down even in FY17 as recovery
of NPAs is as low as 5%.

PROBLEM OS NPA TO GET WORSE IN Q4 due to following method of providing for NPAs:

1)  Additional slippage to increase NPAs
2) Fresh Slippage (NPA) where banks have made provisions applicable
for substandard assets i.e. @ 15 to 25%. These shall be further
downgraded as doubtful/Loss Assets as per RBI guidelines which will
necessitate provisions for doubtful/Loss assets i.e. @ 40% to 100% of
NPA amount
3)NPAs which are secured are to be provided at a lesser rate. However
at the year end i.e. 31.03.2016, banks are required to value the
securities to ascertain the fair value of securities and provisioning
requirements. The value of securities is likely to come down due to
fall in real estate prices
4) Banks are required to make additional provisioning for (a)
Restructured assets due to diminution in fair value of assets (b)
Unhedged exposure

Outlook for BOI is dim and grim as even Operating Profit nosediving,
ever increasing salary bills and rampant inefficiency

SELL at Cmp should fetch handsome gains to investors. SELL