Amidst the ongoing turmoil in the Markets we now turn our attention to the Public Sector Banking Space to try and unearth good investment possibilities. The first is STATE BANK OF INDIA (SBI) which is the largest Indian Bank in terms of both Market Cap as well as penetration. At CMP 2039 (52 wk high 3515, 52 wk low 1973) it is currently available at a Price To Book of approx.2 which is of course much cheaper than the leading Private Sector Banks but a fair bit higher than the other PSU Bank biggies such as PNB, BOB and CANARA BANK which are trading at a substantially lower P/B currently. However the sheer size and coverage of SBI perhaps makes the premium justifiable.
As far as Corporate performance goes , the performance in the last two quarters has been lacklustre with additional provisioning due to possibility of increased bad loans making a major dent in the Banks Net Profit numbers which fell 45% yoy. However the bright spot in the Q1 FY2011-12 numbers was the NII which was better than estimates as well as the NIMs which stood at a healthy 3.5% despite the hard Rate Regime. The main cause for concern remains the deteriorating Asset Quality with Gross NPAs increasing to 3.5 %.
The other factor which is an overhang is the upcoming FPO/Rights issue which has seen the Scrip languishing and underperforming the Market on the upside. Having said all the above, SBI remains a scrip which every long term investor would have to make part of his portfolio keeping in mind its sheer size and outreach in the Indian rural hinterland and the vast possibilities for the future. As they say in cricket, 'Form is temporary but Class is permanent'. Therefore the entry price in the Scrip also assumes significance. At CMP 2039 SBI is trading close to its 52 wk lows but the current upheavel in the Markets could see it heading lower. Currently its 50 DMA is at 2340 and 200 DMA at 2608.
In my opinion the scrip should be accumulated at current levels as also on all dips for healthy upsides in the long term.
As far as Corporate performance goes , the performance in the last two quarters has been lacklustre with additional provisioning due to possibility of increased bad loans making a major dent in the Banks Net Profit numbers which fell 45% yoy. However the bright spot in the Q1 FY2011-12 numbers was the NII which was better than estimates as well as the NIMs which stood at a healthy 3.5% despite the hard Rate Regime. The main cause for concern remains the deteriorating Asset Quality with Gross NPAs increasing to 3.5 %.
The other factor which is an overhang is the upcoming FPO/Rights issue which has seen the Scrip languishing and underperforming the Market on the upside. Having said all the above, SBI remains a scrip which every long term investor would have to make part of his portfolio keeping in mind its sheer size and outreach in the Indian rural hinterland and the vast possibilities for the future. As they say in cricket, 'Form is temporary but Class is permanent'. Therefore the entry price in the Scrip also assumes significance. At CMP 2039 SBI is trading close to its 52 wk lows but the current upheavel in the Markets could see it heading lower. Currently its 50 DMA is at 2340 and 200 DMA at 2608.
In my opinion the scrip should be accumulated at current levels as also on all dips for healthy upsides in the long term.
No comments:
Post a Comment