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Last Updated : May 14, 2019 04:50 PM IST | Source: Moneycontrol.com

Buy State Bank of India; target of Rs 383: HDFC Securities

HDFC Securities is bullish on State Bank of India has recommended buy rating on the stock with a target price of Rs 383 in its research report dated May 13, 2019.

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HDFC Securities' research report on State Bank of India


Led by high W/Os (~Rs 173bn) and lower slippages (~Rs 80bn, 1.50%), GNPAs dipped ~8% QoQ (Rs 1.72tn, 7.5%). LLPs were ~24% higher QoQ, resulting in a massive ~19% dip in NNPAs (~3%). Calculated coverage jumped ~500bps QoQ to ~62%. SMA I & II nearly halved QoQ to ~36bps, ex-slippages, driven by the upgrade of a large power exposure. Reducing pools of identified stress should reign in near term slippages. We have factored in slippages of 1.80% over FY 19-21E. The glide path is clearer now.


Outlook


While SBIN’s profits were hit in 4QFY19 by higher provisions, best-in-class coverage was a positive outcome. A possible fund-raise will be book accretive. Maintain BUY with an SOTP of Rs 383 (1.3x Mar-21E ABV of Rs 222 + Rs 95 sub value).


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.




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First Published on May 14, 2019 04:50 pm
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