Centrum is bullish on State Bank of India has recommended buy rating on the stock with a target price of Rs 350 in its research report dated November 05, 2018.
Centrum's research report on State Bank of India
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 FY20E core ABV continue to remain attractive. Retain BUY.
Outlook
We expect bank to report 0.6% RoA/ 10%+ RoE by end-FY20E. We continue to like SBIN for its franchise, improved operational performance and contained asset quality. Retain Buy, with SOTP-based TP at Rs350. Key risks: Margin pressure / slow pace of recoveries could impact earnings.
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