Emkay Research has maintained its buy rating on State Bank of India with price target of Rs 2200 in its May 3, 2008 research report. "State Bank of India’s (SBI) Q4FY08 net profit at Rs 18.8 billion was ahead of our expectations mainly driven by higher than expected NII (interest on income tax refund of Rs 4 billion). The operating performance was remained in line with NIMs declining by 10bps at 2.6% on sequential basis, fee income growth remaining strong at 31% (Rs 31 billion). Highlight of the quarter was sharp increase in gross NPAs by 20% qoq to Rs 128 billion. The bank has attributed the same to a) agriculture NPA and b) some slippages in SME segment due to technical reasons."
"However, the management is confident of converting 90% of incremental Rs 22 billion of NPA into standard assets over next 3-4 months. The provision cover has fallen further to 42.1%. if the bank is able to convert the fresh slippages into standard assets, the provision cover could rise to 50%. We are keeping our estimates unchanged for FY09-10E. We maintain our BUY rating with price target of Rs 2200," says Emkay's research report.
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Source: Moneycontrol.com
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