Q3FY21 Result Update - State Bank of India - ICICI Direct

SBI's asset quality picture within guidance is a positive surprise. Q3 slippages around Rs. 2073 crore and new restructuring in Q3 were at Rs. 18125 crore. This brings stressed assets status as on December 2020 at Rs. 41000 crore within the guided Rs. 60000 crore i.e. 2.5% of loans as total stress including slippages. Total provisioning for the quarter was at Rs. 103420 crore, which includes Covid-19 provisioning of Rs. 5885 crore. Overall Covid provision now is at Rs. 12976 crore.

Valuation & Outlook

Overall stress being contained at 2.5% of loans as indicated earlier provides comfort reassuring investor confidence in SBI. Covid provisions at Rs. 12976 crore may be raised further in Q4FY21. With retail customers comprising government employees/salaried, the portfolio in this segment appears more resilient in these challenging times. Budget's growth push provides visibility on capex and thereby credit growth pickup. NII growth and moderating provisions augur well for the bank's earnings. We roll over to FY23E and upgrade our PAT estimates marginally for FY21E to Rs. 178 billion. We expect RoA of 0.6% and RoE at 9.5% by FY22E and scope to improve gradually. We, therefore, revise our rating from HOLD to BUY with a revised target price of Rs. 410 (earlier Rs. 290), valuing the stock at ~1x FY23E ABV for standalone bank and subsidiaries valued at Rs. 132 post holding company discount.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_SBI_Q3FY21.pdf

Shares of STATE BANK OF INDIA was last trading in BSE at Rs.393.05 as compared to the previous close of Rs. 355.1. The total number of shares traded during the day was 10611010 in over 97876 trades.

The stock hit an intraday high of Rs. 408.35 and intraday low of 385.2. The net turnover during the day was Rs. 4226621612.

Source : Equity Bulls

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