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India Equity Research Reports, IPO and Stock News
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H u g e s l i p p a g e s b u t s t el l a r p r o f i t g r o w t h…
Stellar profit of | 2800 crore, up12% YoY and 77% QoQ, reported by SBI
was substantially higher than our estimate as provisions were lower than
our expectations. Operational performance continued to be robust with
NIM improving to 3.79% in Q2FY12 from 3.62% Q1FY12. Management
has revised its guidance on NIM upwards from 3.5% to 3.65% for FY12.
GNPA added | 8000 crore in a single quarter, which was higher than our
expectations leading to GNPA ratio reaching a record high of 4.19% and
NNPA ratio rising to 2.04%. This led to a disappointment that slippages
would remain high and provisions are not expected to come down soon.
Added to that is the pressure of investment book MTM expected to be
taken in Q3FY12 due to a spike in G-Sec yields to 9%. We have revised
PAT estimates and expect PAT growth of 16.3% for FY12E to | 96.2 bn.
ƒ Credit growth at 16% YoY but NNPA rises 30% QoQ…
Though credit grew 16.2% YoY to | 7906 billion, slippages
increased by | 80 billion in Q2FY12 from | 62 bn in Q1FY12 mainly
due to agriculture and corporates basically sectors like iron & steel,
gems and jewellery, etc. Within this, | 17.6 bn has slipped from
restructured assets. Net addition after w/off and upgrades was at |
60billion increasing GNPA ratio to 4.19% (| 339.5 bn) from 3.52%
QoQ. NNPA ratio increased to 2.04% (| 161.2 bn) from 1.61%.
ƒ NIM increase meeting management guidance…
As indicated by the management, NIM rose by 37 bps to 3.79% from
3.62% sequentially. With the benefit of base rate hikes and some
deposits due to be repriced at lower rates, overall margins have
been moving northwards for SBI. CASA growth has remained
strong at the 48% ratio and savings deposits alone added over | 290
billion in the last six months boosting NIM further.
V a l u a t i o n
We believe that with accumulated profits and | 30-40 billion capital
infusion from the government, SBI will be able to manage 16-18% growth
and margin of 3.65% as indicated. We expect incremental NPAs to
continue for the next two quarters but stabilise next year while overall
RoA of 0.8-0.9% and RoE in the range of 14-15% could be maintained.
We, therefore, maintain our target of | 2200 and rate the stock as BUY
from a long-term perspective
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
H u g e s l i p p a g e s b u t s t el l a r p r o f i t g r o w t h…
Stellar profit of | 2800 crore, up12% YoY and 77% QoQ, reported by SBI
was substantially higher than our estimate as provisions were lower than
our expectations. Operational performance continued to be robust with
NIM improving to 3.79% in Q2FY12 from 3.62% Q1FY12. Management
has revised its guidance on NIM upwards from 3.5% to 3.65% for FY12.
GNPA added | 8000 crore in a single quarter, which was higher than our
expectations leading to GNPA ratio reaching a record high of 4.19% and
NNPA ratio rising to 2.04%. This led to a disappointment that slippages
would remain high and provisions are not expected to come down soon.
Added to that is the pressure of investment book MTM expected to be
taken in Q3FY12 due to a spike in G-Sec yields to 9%. We have revised
PAT estimates and expect PAT growth of 16.3% for FY12E to | 96.2 bn.
ƒ Credit growth at 16% YoY but NNPA rises 30% QoQ…
Though credit grew 16.2% YoY to | 7906 billion, slippages
increased by | 80 billion in Q2FY12 from | 62 bn in Q1FY12 mainly
due to agriculture and corporates basically sectors like iron & steel,
gems and jewellery, etc. Within this, | 17.6 bn has slipped from
restructured assets. Net addition after w/off and upgrades was at |
60billion increasing GNPA ratio to 4.19% (| 339.5 bn) from 3.52%
QoQ. NNPA ratio increased to 2.04% (| 161.2 bn) from 1.61%.
ƒ NIM increase meeting management guidance…
As indicated by the management, NIM rose by 37 bps to 3.79% from
3.62% sequentially. With the benefit of base rate hikes and some
deposits due to be repriced at lower rates, overall margins have
been moving northwards for SBI. CASA growth has remained
strong at the 48% ratio and savings deposits alone added over | 290
billion in the last six months boosting NIM further.
V a l u a t i o n
We believe that with accumulated profits and | 30-40 billion capital
infusion from the government, SBI will be able to manage 16-18% growth
and margin of 3.65% as indicated. We expect incremental NPAs to
continue for the next two quarters but stabilise next year while overall
RoA of 0.8-0.9% and RoE in the range of 14-15% could be maintained.
We, therefore, maintain our target of | 2200 and rate the stock as BUY
from a long-term perspective
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