Rahul Arora, CEO at Nirmal Bang Institutional Equities told CNBC-TV18, "We had a chance to interact with the SBI management very recently. We are very positive on the stock, I think our analysts believes that the stock will still give you 25-30 percent from where it currently is. Some of the takeaways we have from the management was they were expecting credit offtake to pick up quite substantially in FY16 not so much for the backend of this year. They are expecting slippages to ESOP substantially from here."
"They are expecting steady net interest margins from here as well and they didn’t give us any indication of capital raising at least for the rest two-three quarters. These are sort of things that the street wants to here from the largest public sector bank in the country," he added.
"Specifically, on pressure points, we found out that there were some accounts, obviously no bank will name those individual accounts. But there too they said that the pressure has started easing. So we value the bank at about 1.85 times price to adjusted book value, which is about 15 percent premium to what it has been trading at in its recent history and if we are having a slightly longer-term horizon, this is probably still the best positioned PSU bank to be playing," he said.
"If you want to play even into FY17 probably the upsides could be more but I think a lot of the concerns that we have on asset quality and slippages, even on recoveries, I think a lot of them are sort of getting addressed. So the specific question on insurance could definitely be an upside trigger in terms of value unlocking but I think SBI, even standalone whatever concerns we had on the business as we enter the meeting, we sort of came out readdressing a lot of them."
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