Prabhudas Lilladher is bullish on State Bank of India has recommended buy rating on the stock with a target price of Rs 254 in its research report dated June 06, 2020.
Prabhudas Lilladher's research report on State Bank of India
SBI's earnings of Rs35.8bn beats our estimate (PLe: Rs20.2bn) on the back of strong other income as fee income held up & better recovery from w. off a/c. Although, NII disappointed with flattish growth despite PLe being lower than consensus which was led by interest reversals (for three years) from Agri, slower loan growth and strong liabilities volume despite lowering deposit rates. Bank has disclosed that 22% of customers are under moratorium which cannot be compared to peers as bank has not disclosed based on value. But listening into the commentary and getting colour of morat book, value wise it should be similar to other banks in range of 25-30%, although it seems less vulnerable at this juncture to see a pile up of slippages.
Outlook
We were expecting a downward slippage curve in FY21/FY22, but seems that slippages ratio will remain around 250bps and 200bps of credit cost. Undemanding valuation keeps our BUY rating intact with revised TP of Rs254 (from Rs317) based on 0.8x (from 1.0x) core Mar-22 ABV & Rs106 for subs.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Read More
