Buy State Bank of India; target of Rs 375: Motilal Oswal

Motilal Oswal's research report on State Bank of India

Net slippages fell marginally QoQ, but remained elevated at INR 81.6b (net slippage ratio 2.2% annualized) v/s INR 82.9b in 3Q. Strong operating profitability allowed SBIN to take higher provisions (INR 117.4b; INR 89.4b in 3Q). Absolute NNPA thus fell 5% QoQ to 3.7% of loans (3Q: 4.2%).

Outlook

SBIN is highly geared to economic up cycle and asset quality improvement. Profitability is likely to be the highest among peers due to its policy of recognizing stress upfront and lumpy exposures. Strategic and financial investments are becoming meaningful and add 18% to our SOTP. Buy.