Prabhudas Lilladher is bullish on State Bank of India has recommended buy rating on the stock with a target price of Rs 290 in its research report dated November 05, 2020.
Prabhudas Lilladher's research report on State Bank of India
SBI reported a strong earnings of Rs45.7bn (PLe: 37bn) as it chose to make lower provisioning on lesser slippages of Rs28bn and adequate PCR of 70% & COVID provisions. NII growth of 15% YoY was very much in-line as margins saw slight bump-up of 11bps QoQ, while lower other income offset PPOP trajectory. Bank management is optimistic to end with a stress book of Rs600bn by FY21 with Rs200bn of restructuring and rest slippages (Rs200bn in H2) which look fairly low. Although, looking at the Rs140bn of pro-forma slippages in Q2FY21 we believe, stress to come through higher run-rate of slippages than restructuring, although policy of adequately providing covers risks.
Retain BUY rating with revised TP of Rs290 (from Rs276) based on 0.7x core Sep-22 ABV & Rs152 for Subs as risk-reward remains attractive.
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