Karvy Stock Broking has downgraded its rating on State Bank of India as an underperformer with price target of Rs 1,022 in its April 16, 2009 research report.
“We revise State Bank of India, SBI’s earning estimates to factor in some concerns on total business growth, increase in NPAs, and decline in net interest margin. We expect SBI’s total business to grow at 18.6% (Y/Y) compared to our earlier estimate of 22.1% (Y/Y) in FY10, reduction in margin by 8 bps to 2.41% (from earlier estimate of 2.49%) and downward drift in return ratio (RoAE) to 12.8% (from earlier estimate of 15.8%).”
“We expect SBI’s bottomline to record 13% de-growth (Y/Y) to Rs 75.7 billion; for FY10 we reduce our earning estimates by 20% to Rs 75.7 billion compared to our earlier estimates of Rs 94.1 billion. For SBI’s associate banks we assign total value of Rs 251 per share and we value SBI Life subsidiary at Rs 68 per share and other investments (including mutual fund business) at Rs 40 per share. We reduce our SBI (consolidated) target price by 40.2% to 1,022 per from our earlier target of Rs 1,708. We downgrade the stock as an Under Performer with price target of Rs 1,022,” says Karvy Stock Broking’s research report.
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