Prabhudas Lilladher is bullish on State Bank of India has recommended buy rating on the stock with a target price of Rs 419 in its research report dated January 31, 2019.
Prabhudas Lilladher's research report on State Bank of India
SBI's earnings of Rs55.8bn (PLe: Rs30.0bn) was better on one-off expected benefits from the strong NPA recoveries. Bank also moved to new tax rate by adjusting DTA impact (net Rs13.0bn). Adjusting to one-offs operationally NII was very marginally weak but fee income was quite good coupled with strong control on opex. Key positive was fresh slippages (excluding the HFC A/c) were quite lower, while SMA book came off & progressive resolutions on stress seems to leading to some optimistic visibility on asset quality. Going ahead, loan growth improvement, NIMs & credit cost trends will drive return ratios with much better position on both strong PCR & Tier-I capital.
Outlook
We have slightly tweaked loan growth lower, adjusted NIMs and factored in stake sale gains from SBI Cards (adjusted in SOTP as well). Retain BUY with revised TP of Rs419 (from Rs413) based on 1.3x core Sep-21 ABV & Rs118 for subs.
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