State Bank of India share price target

We maintain Buy on the stock with a revised target price of Rs 477 (SOTP basis core book at 1.1x and subsidiaries at Rs 151).

State Bank of India's (SBIN) Q3FY21 PAT declined 7% YoY to Rs 52bn on a 5% dip in operating profit.

Slippages + restructuring to remain within the guided range SBIN reported strong performance, with healthy NII growth (excluding one-time interest recovery during 3QFY20) and strong recovery in retail credit growth. On the asset quality front, controlled pro forma slippages (INR20.7b) and low restructuring request (0.8% of loans) underscores an encouraging asset quality outlook. Pro forma GNPA/NNPA ratio stood at 5.44%/1.81% (v/s 5.88%/2.08% in 2QFY21). We believe the earnings normalization cycle for SBIN has begun as the...

State Bank of India (SBI) is an attractive play on a gradual recovery in Indian economy, with a healthy PCR (88% including Technical Write Off), robust Tier 1 capital ratio of ~11.9% and a strong liability franchise. Manageable asset quality outlook with a 97% collection efficiency, guidance of just Rs. 60,000 crore for FY2021 slippages and restructuring (~2.5% of gross advances), and only ~Rs 2,000 crore of provisions remaining provide comfort. Stock trades at 1.2x / 1.0x its FY2022E / FY2023E ABVPS which is reasonable;...

Limited retail/SME stress and corporate resolution reacceleration to limit NPAs/credit cost: SBI's GNPA has steadily declined to 5.3% since FY18. This is the lowest among PSBs and even better than that of ICICI. The bank also expects limited stress after Covid-19, given its relatively resilient retail book that includes secured mortgages and unsecured PL built largely around salaried govt. employees. ECLGS/restructuring should limit the stress in the otherwise risky SME portfolio. Improving prospects of resolutions in some large corporates should further reduce corporate NPAs. The bank now carries strong PCR on NPAs (71%), driven by strong PPoP on healthy...

Liquidation of excess cash to boost margins State Bank of India is India's largest bank. The bank operates 21,959 branches globally and has a vast network of 58,599 ATMs/CDMs. It provides a wide range of financial services, such as insurance, credit cards and asset...

SBIN appears well positioned to report strong uptick in earnings as the uncertainty brought about by the pandemic has receded significantly. While collection trends have improved to ~97%, restructuring of up to 1% of loans is expected. Further, legacy issues in the corporate NPA cycle is now largely behind. SBIN carries healthy PCR of ~88% on corporate NPA. We expect credit costs to normalize from FY22E. SBIN's focus has been on building a granular and high-quality portfolio. With retail growth back to pre-COVID levels and improving trends in Home loans, Auto loans, Gold loans, etc. we expect gradual deployment of excess liquidity toward...

SBI reported a healthy operational performance with NII surging 14.6% YoY on the back of sequential improvement in margins. Other income declined by 29% YoY and 10.2% QoQ as a result of higher base due to stake sale. Cost to income ratio for the bank increased by 514 bps QoQ to 55.16% led by one off wage provision of ~| 1600 crore. SBI has estimated total stressed loans worth | 60000 crore by the end of FY21, this is 2.5% of the loans. Fresh slippages estimated for H2FY21 stood at |20000 crore, apart from Q2FY21 unrecognised |14380 crore while total...

We maintain Buy on the stock with target price of Rs 261 (SOTP basis core book at 0.6x and subsidiaries at Rs 111)

Earnings normalization begins sharply raise FY21/FY22E by 45%/24% State Bank of India (SBIN) reported a decent quarter, with healthy NII growth, led by margin expansion, and retail credit growth recovering to pre-COVID levels. On the asset quality front, potential slippages (without the SC order) increased to INR171b, led by the Agri and SME segments. Management indicated total restructuring of INR200b (~0.9% of loans) and a total asset quality impact of INR600b (including restructuring) in FY21E, corresponding to 2.6% of loans. Collection efficiency (CE)...