State Bank of India (SBI) reported a 30.2% yoy growth in its standalone net profit to Rs3,658cr during 2QFY2013. The operating level performance was largely subdued, as pre-provisioning profit declined by 1.6% yoy. During 2QFY2013, the bank’s advances grew by 17.2% yoy, while deposits registered a growth of 16.5% yoy. At the current market price, the stock is trading at PE of 10.50. This is due to the bank’s dominant position and reach, high fee income and superior earnings quality. Expectation is for SBI to deliver 17 to 18% CAGR in net earnings over FY12-FY14 driven by steady NIMs, industry line loan growth and improving operating efficiency. SBI will also benefit immensely from improving macro picture and falling interest regime; in turn growth pick up and receding asset quality pressure. This is a clear buy at the current levels and on declines with a short term target of 2450 and will scale much higher over next 2 years.
Tuesday, 11 December 2012
Recommendations - 11/12/2012
State Bank of India (SBI) reported a 30.2% yoy growth in its standalone net profit to Rs3,658cr during 2QFY2013. The operating level performance was largely subdued, as pre-provisioning profit declined by 1.6% yoy. During 2QFY2013, the bank’s advances grew by 17.2% yoy, while deposits registered a growth of 16.5% yoy. At the current market price, the stock is trading at PE of 10.50. This is due to the bank’s dominant position and reach, high fee income and superior earnings quality. Expectation is for SBI to deliver 17 to 18% CAGR in net earnings over FY12-FY14 driven by steady NIMs, industry line loan growth and improving operating efficiency. SBI will also benefit immensely from improving macro picture and falling interest regime; in turn growth pick up and receding asset quality pressure. This is a clear buy at the current levels and on declines with a short term target of 2450 and will scale much higher over next 2 years.
Monday, 5 November 2012
Next Generation Banks - YES Bank
YES Bank is a good story in the private banking space. Its income has grown from Rs.1671.50 Cr in 2008 to Rs. 7164 Cr in 2012. Profit over the same period has increased from Rs. 200 Cr in FY2008 to Rs. 977 Cr. For the Q2, its income as well as profitability rose by 33%. It has been paying dividends since last 3 years consistently. The strong earnings momentum is expected to continue this year despite the overall bearish market sentiment. It has strong operating metrics, one of the best asset quality in the industry. NPA stands at 0.06% and NIM is at 2.8%. YES bank also received equity broking license from RBI and this would augur well for the bank in the long term.
From valuations perspective it is available at P/E of 13.29(CMP of Rs. 418 ) as against industry PE of 11.67. These valuations appear reasonable given the revenue / earnings that it is projecting for FY13. Investors should invest in this stock at the current levels and also accumulate on declines with a long term perspective to get decent returns.
From valuations perspective it is available at P/E of 13.29(CMP of Rs. 418 ) as against industry PE of 11.67. These valuations appear reasonable given the revenue / earnings that it is projecting for FY13. Investors should invest in this stock at the current levels and also accumulate on declines with a long term perspective to get decent returns.
Subscribe to:
Comments (Atom)