State Bank of India share price target

At the CMP of Rs. 348.5 the stock is trading at 1.2x FY22

well as over a year earlier level, while reducing NPAs for the fourth straight quarter. The operating profit of the bank has increased at steady pace of 7%, while sequential decline in net profit was on account of higher provisions. Bank has improved Net Interest Margin (NIM) to 2.78% in Q4FY2019, while recording increase in CASA deposits ratio to 45.7% end March 2019. The business growth of the bank...

Decline in fresh slippages and higher coverage put SBIN in better stead vs. a year ago, mostly insulating the P&L from shocks. Nevertheless, our earnings estimates are contingent upon smooth recoveries. Partial visibility on the recovery of three large NLCT a/cs (~Rs 160bn) provides some comfort. A book-accretive fund-raise can be expected in the near term. However, we have not factored it into our estimates. While SBINs profits were hit in 4QFY19 by higher provisions, best-in-class coverage was a positive outcome. A possible fund-raise will be book accretive. Maintain BUY with an SOTP of Rs 383 (1.3x Mar-21E ABV of Rs 222 + Rs 95 sub value).

Asset quality witnessed a significant improvement on the back of contained fresh slippages of | 7505 crore and higher write off & recoveries of | 22976 crore. Corporate slippages came in at | 2284 crore (partial exposure of | 1220 crore of Jet Airways as NPA. Bank exposure to IL&FS; is at | 3487 crore out of which | 1125 crore) has been classified as NPA. Accordingly, absolute GNPA declined sharply to | 172750 crore vs. | 187765 crore QoQ. GNPA...

SBIN reported PAT of INR8.4b (our estimate: INR36.5b) for 4QFY19, dragged by higher provisions of INR165b. NII increased 15% YoY to INR229.5b (in-line), driven by strong loan growth of 13% YoY. Domestic NIM expanded 5bp QoQ to 3.02%. For FY19, NII grew by 18%, while PAT stood at INR8.6b (v/s a loss of INR65.5b in the previous year). Other income grew 1.5% YoY/58% QoQ in a seasonally strong quarter to INR126.8b, driving 10% YoY growth in overall revenues. Opex increased 13% YoY to INR187b, mainly led by wage provisions of INR39.8b (FY19: INR56.4b)....

SBIN reported PAT of INR8.4b (our estimate: INR36.5b) for 4QFY19, dragged by higher provisions of INR165b. NII increased 15% YoY to INR229.5b (in-line), driven by strong loan growth of 13% YoY. Domestic NIM expanded 5bp QoQ to 3.02%. For FY19, NII grew by 18%, while PAT stood at INR8.6b (v/s a loss of INR65.5b in the previous year). Other income grew 1.5% YoY/58% QoQ in a seasonally strong quarter to INR126.8b, driving 10% YoY growth in overall revenues. Opex increased 13% YoY to INR187b, mainly led by wage provisions of INR39.8b (FY19: INR56.4b)....

significantly on a q-o-qbasis to 52.5% (Calc) as compared to 58.9% in Q3FY19, helped by the strong earnings performance. Management has guided to bringing down C/I ratio below 50% by FY20E and below 45% by FY21E which we believe is difficult. Notably, during the quarter, Provisions jumped by 174.7% q-o-q to Rs 16,502 crore which was due to balance sheet...

SMA-1&2 loans dropped sharply to lower stress SBI's core performance was better off than expectations on back of higher other income led by continued strong recovery from W.off a/c, decent NII and relatively good opex control. Earnings were dented on back of sharp provision rise based on ageing of certain legacy NPAs in the NCLT List -1 taking PCR to ~100%. Also, asset quality improved on back of lower slippages...

SBI is India's largest commercial bank with balance sheet size of INR ~35tn. It has nearly 22,090 branches on standalone basis.

Loan growth was higher at 12% YoY in Q3FY19 mainly led by 16% YoY growth in the domestic loans (92% of the total loan book). Within domestic credit, corporate advances grew by 21% YoY largely driven by the infrastructure sector (20% YoY). Retail segment continued exhibiting strong growth (18% YoY) led by robust growth in home loans (26.5% YoY). SME continued to grow at a slower pace of 8% YoY as the bank remained cautious in lending to SME after witnessing high levels of stress from this segment. Going forward, we expect advances to grow at a moderate...