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SBI to raise `5,000cr through rights issue by December 2011
State Bank of India (SBI) is likely to raise `5,000cr through a rights issue of shares by
December. The government is expected to infuse ~`3,000cr, keeping its stake in the bank
at ~60%. The `5,000cr rights issue, according to the management would be the first
tranche in the entire process of raising ~`20,000-`30,000cr over the next few years.
While this infusion of ~`5,000cr is expected to shore up the tier 1 ratio of the bank to
~8%, it would be still short of the benchmark 9% that most large banks currently have.
While the capital adequacy ratio is expected to be an overhang on the stock, however, in
the medium term considering the attractive valuations (1.3x FY2013 ABV) and structural
positives, we maintain a buy on the bank with a target price of `2,403
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� �
SBI to raise `5,000cr through rights issue by December 2011
State Bank of India (SBI) is likely to raise `5,000cr through a rights issue of shares by
December. The government is expected to infuse ~`3,000cr, keeping its stake in the bank
at ~60%. The `5,000cr rights issue, according to the management would be the first
tranche in the entire process of raising ~`20,000-`30,000cr over the next few years.
While this infusion of ~`5,000cr is expected to shore up the tier 1 ratio of the bank to
~8%, it would be still short of the benchmark 9% that most large banks currently have.
While the capital adequacy ratio is expected to be an overhang on the stock, however, in
the medium term considering the attractive valuations (1.3x FY2013 ABV) and structural
positives, we maintain a buy on the bank with a target price of `2,403
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