Buy State Bank of India; target of Rs 445: Prabhudas Lilladher

Prabhudas Lilladher is bullish on State Bank of India has recommended buy rating on the stock with a target price of Rs 445 in its research report dated February 04, 2021.

February 08, 2021 / 03:41 PM IST
 
 
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Prabhudas Lilladher's research report on State Bank of India


SBI reported strong earnings of Rs51.9bn (PLe: 42.9bn) a fair beat of 21% for our estimates led by slightly lower provisions and good operating performance. Bank showcased strong performance on asset quality with Pro-forma slippages in the quarter on net basis at Rs20.7bn (on gross basis Rs70-80bn) and restructured book at 0.9% of loans (guidance was <1% in Q2FY21). PCR of 67% on pro-forma NPAs and control on asset quality move our credit cost assumptions towards lower levels of 180-135bps (from 190-180bps) in FY21-23, not seen since FY15. Although, we remain a bit cautious on its Agri & SME book as these surprise on asset quality (as seen past quarters), while corporate at 37% mix has well rated corporates & retail at 39% mix has largely salaried & GOI employees base with higher share of mortgages and hence, we remain less worried on same.


Outlook


Retain BUY rating with revised TP of Rs445 (from Rs325) based on 1.0x (from 0.7x core Mar-23 ABV & Rs168 for Subs.

For all recommendations report, click here

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first published: Feb 8, 2021 03:41 pm

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