SBI achieves target price… Maintain hold with target price of Rs 323… IndiaNivesh

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SBI achieves target price… Maintain hold with target price of
Rs 323…
We had recommended buy on State Bank of India (SBI) on 11th August 2014 after
Q1FY15 results at Rs 242 (adjusted for stock split) for target price of Rs 300 and
upgraded further to Rs 323 after Q2FY15 results thereby highlighting it as top pick
in large cap banking space. Our revised target price of Rs 323 was achieved on 1st
December 2014 giving the return of 32% since 11th August 2014. Key rationales for
recommendation were better than expected Q2FY15 performance with stable
margins, pick up in non interest income, control over fresh impairments and healthy
capital adequacy.
Valuation
We are continuously highlighting SBI as top pick in large cap public sector banking
space apart from Bank of Baroda. SBI’s Q2FY15 results were better than expectation
on operating front. Key positive was stable asset quality with significant decline in
fresh impairments. With macro improvement expected to kick in from H2FY15, SBI
remains the highest beneficiary for the same. With beat on earnings in Q2FY15, we
had revised upwards our earnings estimates marginally by 4% / 2% for FY15E /
FY16E. At CMP of Rs 320, SBI is trading at standalone P/ABV of 2.5x and 2.2x for
FY15E and FY16E respectively. We downgrade the rating from buy to hold with
target price of Rs 323 based on SOTP valuation and maintain 20% discount for
unlisted subsidiaries.

LINK
http://www.indianivesh.in/Admin/Upload/635532757040795000_NiveshDaily%20-%202%20December%202014.pdf