HDFC Securities' research report on State Bank of IndiaSBIN’s net stressed assets (incl. watch list) further fell 7% QoQ led by sharp drop in watch list and stable asset quality (NNPA +2%). SBIN’s watchlist (Rs 180bn, -31% QoQ) at a mere 1.2% is much lower vis-a-vis large pvt banks like ICICIBC (6%) and AXSB (3.7%).
Outlook
SBIN remains the preferred pick amongst PSBs with a well-diversified book, capitalised B/S, superior PCR and lower net stressed book (vs. private peers as well). Further unlocking of non-core investments will provide a cushion to PCR/earnings. The subsidiaries merger will be a key monitorable. Maintain BUY with a SOTP of Rs 310 (1.6x Dec-18E core ABV of Rs 143 + Rs 81 subs value).
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