Brokers' call: Deutsche Bank downgrades SBI

Deutsche Bank downgrades SBI

Deutsche Bank has downgraded State Bank of India ratings to ‘Hold’ and set a target price of Rs 2,110. SBI reported one of its worst quarters in terms of asset, quality, with slippages at 5%, much higher than estimates. Given the weak macro backdrop and weaker monsoon, asset quality challenges may remain high in the near term.

While the stock has already corrected recently and valuations appear attractive at 1.1x FY13E book, there is no near-term catalyst for the stock. Gross NPL in these segments is now at 9.3%, 7.2% and 9.8%, respectively.