SBI (NSE Cash) - Buy
The entire PSU banking space has
undergone a massive corrective
phase in last 10 months. ‘SBI” too
corrected more than 40% from its
February 2015 high.
However, we are now observing a
strong ‘Multi-Year’ trend line support
around 165 - 170
This support coincides with the 78.6%
Fibonacci retracement level of the
large up move from 167.59 to 331.76.
Thus, considering extreme oversold
condition of momentum oscillators,
we advise traders to buy this stock
from current level to a decline up to
172 for a target of
218 in coming
( Chart time: IST 14.30)
January 21, 2016
SBI has been reporting stable numbers with respect to slippages and NPA ratios
over the past several quarters as compared to its peers. The bank’s Gross and
Net NPA numbers were 4.15% and 2.14% for 2QFY2016 as compared to 4.89%
and 2.73% for the corresponding quarter of the previous year and 4.29% and
2.24% sequentially. Though there has been concerns about incremental
slippages, we believe that the current valuation adequately captures the risk
arising from those slippages.
52 week high/low
With expectation of improvement in economic growth in the medium term, asset
quality woes could reduce, which in turn could lead to further improvement in
return ratios. The bank’s core strength has been its high CASA and fee income,
Avg. Daily Volume
which has supported its core profitability in challenging times. Its strong capital
adequacy also provides comfort.
Face Value (
Among PSU banks, we continue to stick to the largest bank as it is a proxy to the
economy in the long term. In our view, the stock is currently trading at a decent
valuation of 0.7x FY2017E ABV (after adjusting
39/share towards value of
Shareholding Pattern (%)
subsidiaries) as compared to its peers.
Op. Inc NIM
ABV ROA ROE
January 21, 2016
Research Team Tel: 022 - 3935 7800
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January 21, 2015