State Bank of India share price target

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)...

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'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...

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.