State Bank of India - Result Update - Emkay

Reco: HOLD
CMP: Rs 2,129
Target Price: Rs 1,950

Slippages remain higher; capital infusion inadequate

- SBI Q3FY12 – NII at Rs114bn ahead of estimates aided by higher loan growth and strong NIM at 4.1%. However, with lower other inc, PAT at Rs32.6bn came in line with our est

- Asset quality continues to disappoint with gross slippages at Rs81bn (3.6% ann). Further, despite equity infusion, Net NPL / networth would stand at high 20%+ for FY12

- Loan growth at 7% qoq came in as a surprise. With 3% qoq growth in deposits, LDR inched 330bps qoq to 85%. Mgmt guided for 16% yoy loan growth for FY12

- Capital infusion + plough back of PAT would raise tier I CAR to 9%. Also, with lower accretion in net slippages, pressure on asset quality to ease. Upgrade to Hold with PT of 1,950.

Source : Equity Bulls

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