HDFC Securities is bullish on State Bank Of India has recommended buy rating on the stock with a target price of Rs 270 in its research report dated June 07, 2020.
HDFC Securities' research report on State Bank Of India
SBIN’s 4Q core and net earnings were below estimates. Asset quality improved, even if one adjusts for the standstill classification impact, but this improvement was aided by higher w/os. The moratorium % is unusually low (vs. peers) and the related disclosures were ambiguous. Further, COVID-19 related provisions (Rs 9.4bn) appear low, in context of those made by peers as well as SBIN’s asset quality track record. Consequently, we’ve reduced our earnings to factor in higher provisions (driven by higher anticipated stress). The term of SBIN’s current chairman is set to end in Oct-20, this creates additional uncertainty.
Outlook
However, current valuations and a strong deposit franchise underpin our stance. Maintain BUY with an SoTP value of Rs 270 (0.75xFY22E ABV + Rs 113 subs value).
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