Moneycontrol Bureau
Brokerage house Goldman Sachs has retained its ‘buy’ rating on State Bank of India with a price target of Rs 360, after its meetings with key divisional heads.
"SBI is undergoing a widespread transformation by capitalizing on technology with a clear emphasis on profitability by: (1) improving its brand image with the younger generation (i.e. through digital branches); (2) upgrading loan processing (acquisition) and recovery to reduce non performing loans (follow-up, litigation management); (3) improving fees (using data analytics, besides pushing through RMs) and (4) reducing costs (investing in alternate channels)," said the Goldman note to clients.
"We believe these initiatives will translate to higher ROA (return on assets) of 1.2 percent by FY18E, with potential to improve to 1.4 percent vs. 0.7 percent in 2Q15, and drive stock price performance," the note said.
The brokerage cautioned that slower-than-expected execution and higher non performing loans could disappoint.
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