Motilal Oswal maintains 'buy' rating on SBI
The bank’s ARB loan book is currently more than Rs 1 trillion; this accounts for ~23% of SBI’s total loan book and ~28% of its domestic loan book.
STATE BANK OF INDIA
RESEARCH: MOTILAL OSWAL
RATING: BUY
CMP: Rs 1,481
Motilal Oswal maintains ���buy��� rating on State Bank of India (SBI). The bank���s rural and agri-business unit comprises: (1) all the business done at its rural and semi-urban branches; and (2) agriculture business done at any branch. SBI has 7,100 branches in rural and semi-urban areas which account for ~70% of its total branch network strength.
About 50% of its employees work in the agri-rural business (ARB) division. The bank���s ARB loan book is currently more than Rs 1 trillion; this accounts for ~23% of SBI���s total loan book and ~28% of its domestic loan book. About 45% of these are farm loans. ARB deposits stand at ~Rs 1.7 trillion and account for ~30% of SBI���s deposits.
SBI���s ARB loan and deposits account for 21-22 % of the industry, while its ARB branch network accounts for 13% of the industry. SBI is consistently gaining market share in this segment. Motilal expects the bank to report consolidated earnings per share (EPS) of Rs 155 in FY09E and Rs 187 in FY10E.
Consolidated book value (BV) will be Rs 1,110 in FY09E and Rs 1,282 in FY10E. Return on assets (RoA) and return on equity (RoE) are expected to be ~1% and 15-16 %, respectively , over the next two years. Adjusted for value of SBI Life at Rs 205/share, the stock trades at 1x FY10E consolidated BV.
RESEARCH: MOTILAL OSWAL
RATING: BUY
CMP: Rs 1,481
Motilal Oswal maintains ���buy��� rating on State Bank of India (SBI). The bank���s rural and agri-business unit comprises: (1) all the business done at its rural and semi-urban branches; and (2) agriculture business done at any branch. SBI has 7,100 branches in rural and semi-urban areas which account for ~70% of its total branch network strength.
About 50% of its employees work in the agri-rural business (ARB) division. The bank���s ARB loan book is currently more than Rs 1 trillion; this accounts for ~23% of SBI���s total loan book and ~28% of its domestic loan book. About 45% of these are farm loans. ARB deposits stand at ~Rs 1.7 trillion and account for ~30% of SBI���s deposits.
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SBI���s ARB loan and deposits account for 21-22 % of the industry, while its ARB branch network accounts for 13% of the industry. SBI is consistently gaining market share in this segment. Motilal expects the bank to report consolidated earnings per share (EPS) of Rs 155 in FY09E and Rs 187 in FY10E.
Consolidated book value (BV) will be Rs 1,110 in FY09E and Rs 1,282 in FY10E. Return on assets (RoA) and return on equity (RoE) are expected to be ~1% and 15-16 %, respectively , over the next two years. Adjusted for value of SBI Life at Rs 205/share, the stock trades at 1x FY10E consolidated BV.
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