Analyst Research Report Snapshot

Title:

State Bank of India (SBI) | Q4FY13 Result Update

Price:

$46.00

Provider:

IndiaNivesh Securities Pvt Ltd

Date:

24 May 2013

Pages:

5

Type:

AcrobatPDF

Companies referenced:

SBI.NS

Available for Immediate Download
Summary:

State Bank of India (SBI) Mixed set of numbers, Margins shrink, Asset quality improves…. Upgrade to BUY with price target of Rs. 2,394… Loan growth of SBI was up 21% y-o-y, well aided by healthy growth seen across large corporate, SME & International loan book. Deposits grew 15% y-o-y, CASA ratio decreased 14 bps y-o-y to 46.5% (up 96 bps q-o-q). Net Interest Income (NII) registered 4% de-growth to Rs 110.8 bn (from Rs 115.9 bn in Q4FY12). NIMs declined by 51 bps y-o-y and 6 bps sequentially to 3.34%. Asset quality surprised positively with 55 bps decline in Gross NPA’s (to 4.75%) and 49 bps decline in Net NPA’s (to 2.10%). Fresh slippages were to the tune of Rs 58.7 bn (vs 81.8 bn in Q3FY13), and higher recoveries of Rs 11.3 bn were made (vs Rs. 9.6 bn in Q3FY13). Valuation: SBI’s Q4FY13 results were impressive on asset quality front with lower than expected slippages along with healthy provision coverage. Further negative surprise was on the margins front with more than expected contraction seen in interest rates across few of the segments. Although NIMs have come down marginally during the quarter, but it still remains to be at the higher end, highest amongst the PSU space. With bank’s strategy to focus on maintaining higher asset yields and maintain higher margins, improvement in delinquencies is quiet impressive. At CMP of Rs 2,176, based on street estimates, the stock is trading at consolidated FY14E & FY15E P/BV of 1.1x and 0.9x, respectively. On assiging 1.0x P/ABV multiple for FY15E numbers, we have arrived at FY15E based price target of Rs 2,394. Given the 10% upside potential from current levels, we upgrade the stock to BUY.

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