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Monday, June 11, 2012

Large Cap Stock Research Report - SBI

Stock research team of Motilal Oswal (a leading stock broking firm) has come up with a stock reseach report on State Bank of India (SBI). Checkout the stock report and target stock price.

SBI Stock trades at 20%+ discount to it's long-term average valuations.

A challenging macroeconomic environment in India and asset quality issues for SBI over the last couple of years have led to significant correction in valuations. SBIN is trading at a discount of over 20% to its Long-Period Average valuations.

For SBI, strong core income performance is most likely to continue and stock research team at Motilal Oswal is conservative on credit cost estimates which would provide a cushion in case asset quality surprises negatively.

With a market share of 25%, SBI is almost like a proxy to the Indian economy and SBI has historically traded at a premium to other Public Sector Banks (PSB's), despite its return ratios being lower. Over FY12-14, SBIN's RoA and RoE are expected to converge with other PSBs.

It is expected that RoA will improve from 0.9% in FY12 to 1.1% by FY14 and RoE will improve from 15.7% in FY12 to 17%+ by FY14.

SBI is a top pick in PSB space, with a stock price target of Rs.2,725 ( this is 1.25x FY14E consolidated BV + Rs.102 for Insurance business).

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