SBI Home Finance Ltd. share price target

Maintain BUY with an SOTP of Rs 362 (1.3x Dec-20E ABV of Rs 192 + Rs 112 sub value). SBIs net earnings grew ~4.2x QoQ, but the bank provided inadequately (+50%) on a large NCLT exposure. Broader improvement was visible. Loans grew 12% YoY, NIM expanded 47bps and core PPOP rose 11%. Cost creep and weak fees, predictably, featured among the misses. We are surprised on the nonchalance with sagging deposit growth, which we believe owes to a relatively low C/D ratio.

SBI reported all-around strong Q3 performance before QIP, with better loan growth (up 12% yoy), healthy NIMs (up 3bps qoq to 2.76%), and a sharp reduction in the GNPA ratio to 8.7% (9.95% in 2Q). Although PPoP growth was dragged down by higher opex/subdued fees, the heavy investment provision write-backs of Rs80bn led to the bank reporting a strong profit of Rs38.9bn. The bank reported lowest slippages in the past 13 quarters at Rs65bn and expects contained slippages going forward, which coupled with heavy NPA resolutions (incl. Essar Steel/some power accounts) to help in further NPA reduction. The IL&FS; holdco...

We retain Buy on State Bank of India (SBIN) with SOTP-based TP unchanged at Rs350. Q2FY19 results were an extension of positive trends witnessed in recent past across key ratios domestic margins, loan growth, slippages and asset recovery and return ratios. Commentaries across each of the above aspects remain positive (unchanged since last quarter). Watchlist portfolio stands reduced to 1.04% (vs 1.3% as at FY18); management has reiterated its stance on moderation in slippages / credit cost for FY19E. Capital position remains strong, subsidiaries profitable. Valuations at 1.4x...

Asset Quality Stress Peaking Out: Maintain BUY State Bank of India (SBI) positively surprised on asset quality front in 1QFY19 led by (a) sequential decline in gross slippages to Rs143.5bn vs. Rs336.7bn in 4QFY18; (b) moderation in standard stressed assets to 1.24% in Jun'18 vs. 1.42% Mar'18; (c) improvement in PCR excluding technically written-off accounts to 69.4% in 1QFY19 vs. 66.2% in 4QFY18; and (d) 22bps QoQ improvement in GNPA ratio to 10.7% and 44bps QoQ improvement in net NPA ratio to 5.3%. Additionally, the Bank holds 71% PCR (vs. 61% in 4QFY18) on accounts referred to NCLT by the RBI, which are still under different stage of resolution. On the operating front, NII grew by 23.8%...

We retain Buy on State Bank of India (SBIN) with revised SOTP-based TP at Rs350. Q1FY19 results saw several hits healthy NII, improved margins, strong core operating profit and lower slippages; and few misses feeble other income growth, elevated provisions and thus yet another quarter of losses. Watchlist portfolio stands reduced to 1.24%; management has reiterated its stance on moderation in slippages / credit cost for FY19E. Focus shifts towards recoveries and balance sheet growth. Capital position remains strong, subsidiaries profitable. Valuations continue to remain attractive. Retain BUY....