State Bank of India share price target

State Bank of India's (SBI's) Q2FY2021 numbers largely met expectations, wherein operational numbers were in-line, but asset quality performance was mixed. Collection efficiency for domestic loans (excl. agri loans) is at an encouraging 97%. However, on a normalised basis, asset quality deteriorated marginally, with GNPA and NNPA ratios increasing by 44 bps and 22 bps, respectively. Asset quality picture appears manageable, PCR of 88.2% is a cushion for investors; legacy assets are well-provided for; margins expected to be stable SBI currently trades at 0.8x / 0.7x its FY2022E / FY2023E book value; we maintain a Buy...

Pro forma NPAs were sharply higher at 5.88% (up 60 bps QoQ), led by slippages of Rs140bn or 2.5%. Over 60% of these came from the agri portfolio. However, ~Rs.60bn of these have been already upgraded in...

SBI strongly beat earnings estimates by 72% with a PAT of Rs45.7bn, aided by slightly better margins and contained provisions. Proforma slippages were relatively higher at Rs14.4bn. GNPA stood at 5.9% mainly from the SME/agri segment, but the bank has seen some pull-back in Oct'20. Overall collection efficiency has touched 97%, similar to large private peers. SBI expects restructuring to the extent of Rs195bn (0.9% of loans) and slippages in H2 (ex. proforma slippages) largely around BAU levels (Rs100bn in each quarter). The guidance looks optimistic, but management contends that its retail book remains resilient, built largely around...

State Bank of India (SBIN) is the largest public sector bank in terms of assets, deposits, branches, number of customers, and employees having pan-India presence. As of March 20, SBIN has a network of 22,141 branches and 58,555 ATMS.

Continued trend in Asset Quality improvement, steady 1QFY21 performance and attractive valuation reinforce our conviction that the bank is well placed to fight impending stress. However, the transition of the bank's top post is likely to be a key overhang. The pointers which acknowledge our conviction are: 1) In 1QFY21, gross slippages declined to 39.1bn v/s 82.9bn in the previous quarter, which resulted in decline in headline NPA ratios with GNPA at 5.44% (v/s 6.15% in 4QFY20) and NNPA at 1.86% (v/s 2.23% in 4QFY20). 2) A positive surprise on Loan under moratorium which reduced to 9.5% of loan amount against 23% declared earlier. 3) Business growth in line with industry aided by strong domestic NIMs (3.24% v/s 2.97% in the previous...

We initiate Buy on State Bank of India (SBIN) with a target price of Rs 240 (SOTP basis, valuing core book at 0.6x FY22E ABV and Subsidiary value at Rs 110). SBIN with business size of ~Rs 57trn is the largest commercial bank with ~22.8/19.7% market share in deposits/ advances in India.

We initiate Buy on State Bank of India (SBIN) with a target price of Rs 240 (SOTP basis, valuing core book at 0.6x FY22E ABV and Subsidiary value at Rs 110). SBIN with business size of ~Rs 57trn is the largest commercial bank with ~22.8/19.7% market share in deposits/ advances in India.

NIMs climb up significantly, costs of funds come lower: The bank's NIMs increased to 3.24% (up 23 bps YoY/30 bps QoQ) as Cost of Funds also fell to 4.37% (down 48 bps YoY/23 bps QoQ) for Q1FY21 as the bank passed on the benefits of fallen interest rates to the customers by decreasing its MCLR. The bank's CASA increased to 43.83% (43.53% in Q4FY20), as the...

The bank further built COVID-19 provisions of INR18.4b, taking the total COVID related provisions to INR30b (15% on SMA accounts overdue on 29 NII grew 16% YoY (+17% QoQ) to INR266b with domestic NIMs improving by Other income grew 18% YoY, led by stake sale gains of INR15.4b in SBILIFE while opex growth moderated to 2% YoY (11% QoQ decline), and thus, C/I ratio improved to 50% (v/s 52.5% in 4QFY20). Total slippages declined to INR39.1b (0.7% annualized), facilitating a 13%/18% QoQ decline in GNPLs/NNPLs. PCR improved ~190bp QoQ to 67% Overall, 90.5% of term loans have paid two or more EMIs while the rest have paid less than two EMIs these include 4.2% in retail and SME, 3.3% in private corporates and the rest 2.0% are AAA or AA rated companies. Furthermore, moratorium availed in corporate accounts is much lower than expected while total COVID-19 provisions of INR30b and lower SMA book of INR17.5 (0.1% of loans) provides comfort.

State Bank of India (SBI) posted encouraging results with asset-quality improvement on a sequential basis, even as operational performance came mixed, aided by one-time gain of stake sale benefit of Rs. 1,539 crore from the subsidiary. However, weak other income and higher provisions expenses resulted in PPOP and PAT missing estimates. Net interest income (NII) came at Rs. 26,642 crore, up 16.1% y-o-y and 17% q-o-q, in line with estimates. Non-interest income came at Rs. 7,957 crore, flat y-o-y but was down by 40% q-o-q, mainly as the quarter saw impact of fee and charge waivers amidst pandemic. However, the key is the balance sheet strength and asset quality, on which parameters the bank fares well....