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M a n a g e m e n t d e l i v e r s a s i n d i c a t e d …
PAT of | 15.8 billion was close to our estimates of | 16.5 billion. The
operational performance was robust with NIM improving to 3.62% from
3.07% (3.26% on an adjusted basis) in Q4FY11. Higher provisions due to
investment depreciation, slippages and restructured loans kept overall
profits lower as estimated. The management guidance remains strong on
NIMs at over 3.5% and credit growth targets, along with rise in slippages
till H1FY12. Hence, we remain bullish on the stock.
ƒ Provisions remain high with higher slippages but as estimated…
SBI provided | 41 billion that included | 27.8 billion on slippages lower
than Q2FY11 and | 10.48 billion due to investment depreciation.
Slippages rose to | 62 billion in Q1FY12 from | 56 billion in Q4FY11 again
due to agriculture and corporate sector. However, net addition was under
control at | 30 billion inching up GNPA ratio to 3.52% from 3.28%
sequentially. As provisions remained high, PCR improved to 67% from
65% and NNPA ratio remained flat at 1.6%. Provisions for taxes remained
high at 50% due to non tax deductible provisions. We remain cautious on
asset quality but believe from hereon though provisions will remain high,
overall profitability will be maintained on a strong operating performance.
ƒ Growth momentum strong with margins on the rise…
Credit growth remained strong at 18% YoY to | 7881 billion and deposits
grew 16.5% YoY to | 9500.7 billion, leading to NII growth of 23%YoY and
20% sequentially to | 96 billion. NIMs improved to 3.62% due to benefit
of repricing of old high cost deposits and steep base rate hikes. We
expect management to be able to meet its guidance of 3.5-3.6% on NIM.
V a l u a t i o n
Credit growth in the 16-19% range and margins at ~3.5% should be
considered a strong performance in FY12E. RoE in the range of 14-15%
and RoA of 0.9% for the next two years looks reasonable. Asset quality
will stay hazy with GNPA at 3.1% and NNPA at 1.2% by FY13E. We,
therefore, continue to maintain our target multiple at 1.7x in FY13E ABV
and value the bank at | 2700 including | 600 from associate banks and
group companies. We rate the stock as BUY from long-term perspective.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
M a n a g e m e n t d e l i v e r s a s i n d i c a t e d …
PAT of | 15.8 billion was close to our estimates of | 16.5 billion. The
operational performance was robust with NIM improving to 3.62% from
3.07% (3.26% on an adjusted basis) in Q4FY11. Higher provisions due to
investment depreciation, slippages and restructured loans kept overall
profits lower as estimated. The management guidance remains strong on
NIMs at over 3.5% and credit growth targets, along with rise in slippages
till H1FY12. Hence, we remain bullish on the stock.
ƒ Provisions remain high with higher slippages but as estimated…
SBI provided | 41 billion that included | 27.8 billion on slippages lower
than Q2FY11 and | 10.48 billion due to investment depreciation.
Slippages rose to | 62 billion in Q1FY12 from | 56 billion in Q4FY11 again
due to agriculture and corporate sector. However, net addition was under
control at | 30 billion inching up GNPA ratio to 3.52% from 3.28%
sequentially. As provisions remained high, PCR improved to 67% from
65% and NNPA ratio remained flat at 1.6%. Provisions for taxes remained
high at 50% due to non tax deductible provisions. We remain cautious on
asset quality but believe from hereon though provisions will remain high,
overall profitability will be maintained on a strong operating performance.
ƒ Growth momentum strong with margins on the rise…
Credit growth remained strong at 18% YoY to | 7881 billion and deposits
grew 16.5% YoY to | 9500.7 billion, leading to NII growth of 23%YoY and
20% sequentially to | 96 billion. NIMs improved to 3.62% due to benefit
of repricing of old high cost deposits and steep base rate hikes. We
expect management to be able to meet its guidance of 3.5-3.6% on NIM.
V a l u a t i o n
Credit growth in the 16-19% range and margins at ~3.5% should be
considered a strong performance in FY12E. RoE in the range of 14-15%
and RoA of 0.9% for the next two years looks reasonable. Asset quality
will stay hazy with GNPA at 3.1% and NNPA at 1.2% by FY13E. We,
therefore, continue to maintain our target multiple at 1.7x in FY13E ABV
and value the bank at | 2700 including | 600 from associate banks and
group companies. We rate the stock as BUY from long-term perspective.
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