2 December 2019 After reporting a sub-optimal performance over the last few years, SBIN appears well positioned to report a strong uptick in earnings. With the overhang on Essar resolution getting clear, recoveries for the bank are expected to be robust at ~INR120b (90% of exposure). This will enable it to further improve upon the PCR and provide toward a few other residual stressed accounts. Our deep-dive analysis on stressed accounts suggests that SBINs exposure to the stressed pool stands at ~2% of total loans, which we believe is manageable. However, according to SBINs disclosure on stressed accounts, net stressed loans (excl. SBIs subs SBI MF, SBI Life, SBI Cards and SBI Cap have displayed a robust performance over the last few years. At CMP, subs account for ~34% of total valuation, while SBIN trades at a discount of 24% to its six-year average (1.2x ABV) (refer page 7 for quick snapshot on subs).