Buy State Bank of India; target of Rs 365: Motilal Oswal

Motilal Oswal's research report on State Bank of India

SBIN reported a loss of INR77.2b, with slippages spiking up to INR336.7b (INR174.35b from known stressed book), even as total revenue exceeded our estimate by 9%. The size of watch-list declined to INR258b (including corporate SMA-2 and stressed SMA-1 advances).

Outlook

We expect provisioning expenses to decline sharply, while gradual pick-up in loan growth/margins is expected to further boost earnings. We raise our FY19/20E earnings by 36%/12% and revise our PT to INR365 (1.5x FY20E ABV for bank). Maintain Buy.

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