Reviews

STATE BANK OF INDIA

{Ticker : 500112 { FV: Rs.1 { 52-Week H/L: Rs.373.70/244.35


We had previously recommended State Bank of India (SBI) in volume 36, issue no. 10 (dated December 30, 2019), when the stock was trading at Rs 329.85. SBI is a multinational, public sector banking and financial services statutory body. In Q2FY20, the bank's net profit rose substantially to Rs 3,012 crore from Rs 945 crore in Q2FY19. Provision Coverage Ratio (PCR) improved by 1,049 bps to 81.23 per cent in Q2FY20 from 70.74 per cent in Q2FY19. The bank's Gross Non-Performing Assets (GNPA) ratio was reported at 7.19 per cent, down by 276 bps YoY. Capital Adequacy Ratio (CAR) improved to 13.59 per cent in Q2FY20, an increase of 98 bps on a YoY basis. The bank has one of the lowest net stressed assets amongst corporate banks, which is likely to drive a decline in the credit cost. Additionally, NCLT write-backs will further boost earnings. Thus, we recommend a HOLD.