SBI results disappoints significantly on the NPA front

Views of Mr.Vaibhav Agrawal(VP Research-Banking) - Angel Borking on SBI Result: "Sbi's numbers disappointed significantly on the NPA front. While we were expecting about a Rs4000cr increase in Gross NPAs (which was in any case more than what the management had been guiding for), the bank reported more than a Rs7000cr increase. Similarly, Net NPAs too increased substantially more than expected. Net Interest income also disappointed, coming in more than 5% below estimates. The numbers are overall reflective of the weak macro-economic trends and while we will watch out for the management's commentary on the outlook for slippages and recoveries, but overall for the next couple of quarters at least, asset quality concerns are likely to continue.

As a result, in the near-term, PSU bank stocks like SBI are likely to continue underperforming. Considering that valuations are cheap, value-buying can be seen in these stocks, but within large PSU banks as well, we would prefer some of SBI's peers from a long-term value-buying perspective, as they are trading comparatively cheaper than SBI."

The SBI stock closed the day at Rs.1887.95, down by Rs.84 or 4.26%. The stock hit an intraday high of Rs.1994.95 and low of Rs.1877.55.

The total traded quantity was 22.84 lakhs compared to 2 week average of 8.05 lakhs.

Source : Equity Bulls

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