Recommendation from Banking Sector

This section gives a recommendation of a stock having stock price below Rs 150 with sound fundamentals and expected to give handsome returns over a one-year time horizon.[EasyDNNnews:PaidContentStart]

Bank of India (BOI): MOVING AHEAD WITH DIGITAL GROWTH

HERE IS WHY
✓  Strong Credit Pipeline and Sector Growth
✓  Focus on Retail, Agriculture, and MSME Segments
✓  Digital Transformation and Asset Quality Improvement

The Indian economy has shown resilience with a projected GDP growth of 6.8 per cent in FY26, supported by government reforms and favourable macroeconomic policies. The banking sector, in particular, continues to benefit from robust domestic demand, with the Reserve Bank of India’s steady policy stance aiding in maintaining economic stability. The sector's resilience is reflected in improving balance sheets, low non-performing assets (NPAs), and a healthy credit growth outlook.

Bank of India (BOI), founded in 1906 and nationalised in 1969, is a leading public sector bank in India with a strong presence both domestically and internationally. It operates across retail banking, corporate lending, MSME finance, and digital banking services. Bank of India’s (BOI) growth trajectory is driven by several key catalysts, ensuring steady business momentum despite market challenges. BOI reported a 7.6 per cent YoY increase in PAT, reaching ₹2,555 crore for Q2 FY26. This growth was supported by strong loan expansion, particularly in the retail and MSME sectors. Global advances grew by 14 per cent YoY to ₹7,09,145 crore, while deposits increased by 10.1 per cent.

However, NIM contracted slightly to 2.41 per cent due to higher-cost deposits. The bank expects margin stabilization and recovery in the second half of FY26. Management expects loan growth of 12-13 per cent in FY26, backed by a strong ₹70,000 crore credit pipeline. Of this, ₹50,000 crore is expected from the corporate sector, and ₹20,000 crore from the RAM (Retail, Agriculture, MSME) segment. RAM now represents 58.2 per cent of the total loan book, providing stability and reducing concentration risk. This strategic focus on RAM positions BOI to manage growth efficiently and mitigate risks.

With a ₹2,000 crore IT budget for FY26, BOI is heavily investing in digital platforms to enhance operational efficiency and expand its loan book. Digital solutions such as BOI TradeEasy, which enables MSMEs to secure loans within 30 minutes, are expected to accelerate loan growth, especially in the underserved MSME segment.

For Q2 FY26, BOI saw an 8 per cent YoY increase in net profit to ₹2,555 crore, driven by solid loan growth, especially in the RAM segment. Non-interest income grew 2.49 per cent QoQ, boosted by strong treasury performance. The bank's asset quality improved, with Gross NPA reducing to 2.54 per cent and Net NPA improving to 0.65 per cent. For FY25, BOI’s NII grew by 6 per cent to ₹24,394 crore, while non-interest income surged by 48 per cent YoY to ₹8,994 crore. The bank’s net profit for FY25 soared 46 per cent YoY to ₹9,219 crore, demonstrating its ability to capitalize on favorable market conditions. The bank remains well-capitalized, with a CRAR of 16.69 per cent, providing ample capacity for future growth.

At a current market price of ₹146, Bank of India trades at an attractive P/B of 0.8x, well below the industry’s 1.17x, suggesting room for upside as it recovers margins and strengthens its credit book. With a healthy ROE of 12.4 per cent, higher than most peers, and a dividend yield of 2.78 per cent, BOI offers an attractive investment opportunity. The bank’s Retail, Agriculture, and MSME (RAM) loan segment grew by 17.02 per cent YoY, with retail advances alone surging by 19.96 per cent. This increased granularity in its loan portfolio, with RAM advances now constituting 58 per cent of the total, helps reduce concentration risk and stabilises margins. The bank is also capitalising on strong corporate loan growth, with a robust ₹70,000 crore credit pipeline, 71 per cent of which is from the corporate sector. Bank of India’s solid growth visibility, cleaner asset quality, and digital push support our BUY recommendation.

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