Stock watch: Bank of Baroda

Analysts are bullish on the Bank of Baroda (BoB) stock. In today's market, the scrip rose 3.05 per cent to Rs 223.25 as compared with its previous close of Rs. 216.65.

In an effort to improve its prospects, the bank has kick started several new initiatives. The bank has recently introduced 12 and 24 hour banking in certain branches.

According to analysts, the improved business prospects brought about by the ongoing initiatives at the bank, combined with lower depreciation on investments and better asset quality will drive BoB's earnings till FY07.

Analysts expect BoB's EPS to increase by 41 per cent in FY2006 and by 25 per cent in FY2007. BoB posted a net profit of Rs 676.8 core for FY2005 and analysts estimate it to go upto around Rs 1032 crore in FY2006.

They estimate the bank's EPS to be Rs 32.5 in FY2006. The bank has also proposed for an incentive based remuneration system which could motivate the employees and contribute to the fundamental growth of the bank.

BoB's technology transformation is underway. The total cost of the technology plan and its re-branding exercise is estimated to be around Rs 600 crore.

BOB has engaged Hewlett Packard as Strategic Technology Partner-System Integrator-on a five year contract for providing, building and operating the entire IT systems of the bank covering the whole gamut of banking operations.