State Bank of India (Buying Range: |2210-|2150)
• SBI is the market leader (~18% market share) by a wide margin
with a gross advances of | 9.45 trillion. It has led the rate cuts and
is offering one of the lowest lending rate across the industry. In
spite of this, it is maintaining one of the highest NIM at ~3.7%. A
strong operational performance led by NII enables SBI to cover up
for higher provisioning and post decent profitability
• Although NPAs are expected to remain elevated for couple of
quarters and stay between 4% and 5%, it is mainly factored in the
price. Considering the large size of SBI, its exposure to stressed
sectors is relatively low compared to its peers
• Besides, the economy and investment cycle is near bottom and
interest rates are expected to come down. A few reform
measures (like fast environmental clearance, land clearance, etc.)
may surprise positively. Such a scenario remains positive for high
beta stock like SBI to outperform
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