Jefferies retains 'underperform' on State Bank of India

Moneycontrol Bureau

Brokerage house Jefferies has retained its 'underperform' rating on State Bank of India (SBI) citing no catalyst in the near term for the stock to move up. The broking firm however has raised its target price to Rs 1970 from Rs 1850 earlier based on 1.22 time price to book value and 6.74 price-earnings multiple on 12 months consolidated rolling earnings.

"With a sticky cost base, the choice for SBI is limited to growing the loan book at the cost of net interest margin (NIMs)/fee. With no visibility on asset quality and falling core earnings, there is no near term catalyst for the stock to move up," said the Jefferies note.

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"In the near term, it is quite likely that the stock could drift lower by a few percentage points more, at which level, valuations could start to look attractive once again for a short term bounce back. We do not recommend putting in fresh money into the stock at this point and rather wait for lower entry levels," said the Jefferies note to clients.

At 12.00 hrs IST, SBI was trading flat at Rs 2174.75, down Rs 1.50.