SBI - 4QFY2013 Result Review - Angel Broking

State Bank of India announced moderate set of numbers for the quarter, which came largely on expected lines. While NII declined by 5.3% yoy to Rs. 11,078cr, non-interest income grew at modest 5.4% yoy to Rs. 5,547cr. As guided by the management earlier, the bank has provided around Rs. 950cr for wage revisions and other employee benefits during the quarter. Operating expenses for the bank expectedly grew by 20.3% yoy to Rs. 8,860cr. The bank's provisioning expenses grew by 33.1% yoy to Rs. 4,181cr, as the bank witnessed higher write-offs during the quarter (to take tax benefits, in-line with what seen in other PSU banks). Overall, earnings declined by 18.5% yoy to Rs. 3,299cr, in-line with what we had estimated. The banks performance on the asset quality front, with slippages at Rs. 5,868cr and incremental restructuring at Rs. 8,669cr, also came on the guided lines. Overall, the bank reported improvement in the asset quality, as absolute Gross and Net NPA levels declined sequentially by 4.2% and 13.5% respectively (primarily due to sequentially lower slippages and healthy recoveries/upgrades). At the current market price, the stock trades at a valuation of 1.2x FY2015E P/ABV.

We would recommend a Buy rating on the stock, with a target price of Rs. 2,669.

Source : Equity Bulls

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