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State Bank of India Target - | 3234
• SBI has consistently managed ~16-17% market share in both
deposits, advances. Retail deposit funds ~82% of total deposit
that is stable in nature while its bulk deposit proportion is sub
10%. Hence, liquidity risk & interest rate risks are limited for SBI.
Going ahead, we expect SBI to maintain its market share and
grow in line with industry at 15.5% CAGR for deposit to | 1860692
crore and credit CAGR of 15.2% to | 1604457 crore in FY16E
• Supported by the strong liability franchise (14000 branches and
44% CASA ratio), its cost of fund (sub 6%) is among the lowest in
the industry, which enables the bank to earn such strong NIM of
3.2% (domestic NIM - 3.5%) on such a large base. We expect the
margins to be maintained
• GNPA stood at | 60434 crore (4.9% of credit) while its standard
restructured assets are manageable at 3.5% (| 42226 crore) as on
June 2014. Considering the large size of SBI, its exposure to
stressed sectors is relatively low compared to its peers. We
expect GNPA and NNPA ratio to be 4.7% and 2.5%, respectively,
by FY16E
• We expect the bank to post healthy 18% CAGR in profit to
| 15908 crore, over FY14-16E with return ratios of RoA at 0.7-
0.8% and RoE of 11-12%+. We continue to recommend SBI led
by comfort on scale and relatively lower headwinds on the asset
quality. We assign a target price of | 3234, valuing the core book
at 2x FY16E ABV (i.e. 1.4x P/BV) and adding | 450 for associate
banks and subsidiaries (life and general insurance, AMC, etc.)
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
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State Bank of India Target - | 3234
• SBI has consistently managed ~16-17% market share in both
deposits, advances. Retail deposit funds ~82% of total deposit
that is stable in nature while its bulk deposit proportion is sub
10%. Hence, liquidity risk & interest rate risks are limited for SBI.
Going ahead, we expect SBI to maintain its market share and
grow in line with industry at 15.5% CAGR for deposit to | 1860692
crore and credit CAGR of 15.2% to | 1604457 crore in FY16E
• Supported by the strong liability franchise (14000 branches and
44% CASA ratio), its cost of fund (sub 6%) is among the lowest in
the industry, which enables the bank to earn such strong NIM of
3.2% (domestic NIM - 3.5%) on such a large base. We expect the
margins to be maintained
• GNPA stood at | 60434 crore (4.9% of credit) while its standard
restructured assets are manageable at 3.5% (| 42226 crore) as on
June 2014. Considering the large size of SBI, its exposure to
stressed sectors is relatively low compared to its peers. We
expect GNPA and NNPA ratio to be 4.7% and 2.5%, respectively,
by FY16E
• We expect the bank to post healthy 18% CAGR in profit to
| 15908 crore, over FY14-16E with return ratios of RoA at 0.7-
0.8% and RoE of 11-12%+. We continue to recommend SBI led
by comfort on scale and relatively lower headwinds on the asset
quality. We assign a target price of | 3234, valuing the core book
at 2x FY16E ABV (i.e. 1.4x P/BV) and adding | 450 for associate
banks and subsidiaries (life and general insurance, AMC, etc.)
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
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