Accumulate SBI for a target of Rs 3185 : Angel Broking

by khalid on 16/08/2010 · 0 comments

Angel Broking has recommended an “Accumulate” on SBI with a price target of Rs 3185 in its report dated 12th Aug 2010 based on Q1FY11 Results. The CMP of State Bank of India (SBI) is Rs 2849 on 13th August 2010.

Due to strong CASA and fee income, State Bank of India (SBI’s) core RoEs have improved over the past few years and unlike virtually all other PSBs, actual FY2010 RoEs are below core levels due to low asset yields, providing scope for upside as the CD ratio improves and yields normalise to sectoral averages. SBI is trading at 2.1x FY2012E ABV while excluding value of insurance and capital market subsidiaries, it is trading at 1.7x FY2012E ABV v/s its 5-year range of 1.3-2.0x and median of 1.7x.

We believe this provides reasonable upside, especially in light of its dominant position and reach, strong growth and superior earnings quality. We maintain an “Accumulate” on the stock, with a Target Price of Rs 3185, the broking house said.

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