Motilal Oswal's research report on State Bank of India
We like SBIN for its lowest NSL of 6.7%, PCR of 63%, healthy capitalization (CET1 of 10%), strong liability franchise (CASA ratio: 46.5%) and focus on core operating profitability. Asset quality performance was largely in line. Although ABs surprised negatively, the worst is expected to be behind. Slippage ratio is expected to decline in ensuing years.
Outlook
SBIN is highly geared to economic upcycle and improvement in asset quality. Profitability is likely to be the highest among peers due to its policy of recognizing stress upfront and lumpy exposures. Buy with SOTP-based TP of INR 350 (1.1x Dec 18 BV + INR 52 for investments).
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