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.
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