Views on State Bank of India 1QFY2016 Results - Angel Broking

Views of Mr. Vaibhav Agrawal (VP Research - Banking, Angel Broking) on State Bank of India 1QFY2016 Results:

"State Bank of India reported 1QFY2016 results, which were inline with our and street estimates. Advances grew by 6.8%, lower than deposit growth of 13.7% yoy, which resulted in lower NII growth. Other income growth was healthy at 19.7% yoy, resulting in 7.5% growth in operating income. Performance on asset quality was stable with Gross NPA ratio at 4.29% as compared to 4.25% in 4QFY2015 and Net NPA ratio was at 2.24%. Slippages came in lower on yoy basis as expected at INR 7,318cr in 1QFY2016 as compared to INR 9932cr in 1QFY2015. With expectation of improvement in economic growth in the medium term, asset quality woes would reduce, which is expected to improve return ratios. The bank's core strength has been its high CASA and fee income, which has supported its core profitability in challenging times. Its strong capital adequacy also provides comfort. In our view, its current valuation of 1.1x FY2017E ABV, after adjusting for subsidiaries, factors in the positives for the bank. We recommend an ACCUMULATE rating on the stock."

Shares of STATE BANK OF INDIA was last trading in BSE at Rs.256.45 as compared to the previous close of Rs. 269.3. The total number of shares traded during the day was 3216358 in over 35438 trades.

The stock hit an intraday high of Rs. 267.75 and intraday low of 255. The net turnover during the day was Rs. 839568335.

Source : Equity Bulls

Keywords