State Bank of India share price target

SBINs GNPAs jumped ~28% QoQ, led by 3.5x rise in slippages i.e. 6.1% ann. (~70% on account of the RBI?s asset quality review). Net earnings shrunk (-70% QoQ) owing to 2x QoQ rise in LLP (Rs 76bn, 224bps ann.). With a surgical stress recognition process in place, we think the affected financials are close to bottoming out, esp. SBIN.

NII 1.2% yoy to Rs 136bn below our estimate due to interest reversal of Rs8bn. NIM declinedby8bpsqoqduetointerestreversal Noninterestincomegrewbyahigher18%yoy,ledbyhighertradinggainsofRs12.3bn....

SBIN surprised positively on various parameters for the second consecutive quarter. Maintain BUY with an SOTP of Rs 343 (1.7x FY17E core ABV Rs 67 subs value).

SBI's Q2FY16 results were above estimates as the earnings grew by 25.1% YoY (5.1% QoQ) to Rs 38.8 bn led by strong growth in non- interest income and lower provision expenses. However the topline growth disappointed as NII growth slowed down to 7.4% YoY (3.8% QoQ) led by slower loan growth and stable NIMs. Asset quality improved as GNPA and NNPA declined to 4.15% and 2.14% vs 4.29% and 2.24% respectively.

Outlook and valuation: The loan book will see some momentum as the bank aims to improveitsCDratio(currentlyat69.5%).ThismayaidNIM,butgiventhecutinbaserate, weexpectNIMtoremainunderpressure.Asperthemanagement,thestresshassubsided...

SBI is the largest bank in the Indian banking space and we believe will be the key beneficiary among PSBs of a turnaround in the Indian economy. With relatively better asset quality in comparison with other PSBs, we believe the core strength of the bank lies in its diversified advances book. We value the stand alone business at 1.5x FY17E ABV and recommend a Buy rating on the stock with a SOTP based target price of Rs 319 (1.9x FY17E ABV).

SBI reported a good set of numbers with PAT of Rs 3,742 crs, up 23.1% Y-o-Y, above our estimates. Key highlights: 1) NII grew 14.0% Y-o-Y and 6.8% Q-o-Q aided by sturdy margins 2) Non-interest income grew exceptionally by 29.3% Y-o-Y and 62.6% Q-o-Q owing to high trading gains (Rs 1,659 crs in Q4FY15 vs Rs 920 crs in Q3FY15), healthy fee...

yoy) due to higherthanexpected compression in NIM and weak credit growth (7% yoy). Noninterest income was slightly ahead of expectation due to higher treasury gain. Operatingprofitgrew5%yoytoRs92bnandfellslightlyshortofourexpectation.However,...

SBINs headline asset quality was stable (G/NNPA -1/ 4% QoQ) along with a healthy PCR (69.5%). However, slippages were higher QoQ (a seasonal phenomenon) at 2.3% ann. led by SME, Agri & Retail segments.

SBI's Q1FY16 results were above estimates as the earnings grew by 10.3% YoY (-1.3% QoQ) to Rs 36.9 bn due to lower provision expenses. However the topline growth disappointed as NII growth slowed down to 3.6% YoY (-6.7% QoQ) led by slower loan growth and domestic NIM compression of 25 bps QoQ.