-------- Forwarded Message --------
Subject: SBI: 205-215 Zone May Be A Big Hurdle; At Less Than 2%
Recovery Of GNPA In March QTR, NPL May Be Likely To Surge Further
Date: Mon, 30 May 2016 08:42:03 +0530
From: Asis Ghosh <asis...@gmail.com>
Reply-To: asis...@gmail.com
*Trading Idea: SBI*
*
* *CMP: 196*
*
* *Either sell around 205-210 OR on rise around 220-225;*
*
* *TGT: 190*-184-174-166*-159-151-145-140*-134-125 (1-3/6M)*
*
* *TSL> 215 OR > 230*
*
* *Note:* Consecutive closing (3 days) above 230 for any reason, SBI may
further rally up to 240*-250-260* and 275-295* & 305-325*-337 in the
near to long term (alternative bullish case scenario).
*For SBI (Standalone):*
Q4FY16 TTM EPS: 12.98 (FY:16/Actual)
Projected FWD EPS: 15.05-17.50-19.95 (FY:17-19/Estimated)
Last five years average EPS is around 16.60.
Average PE: 12
As par BG metrics and current market volatility:
Present median valuation may be around: 175 (FY:16/TTM)
Projected fair value might be around: 190-202-215 (FY:17-19/FWD)
Present BVPS: 178.31
Average PB: 1.15
Present fair value: 205
SBIN EPS BV P/E Low High Median 200-DEMA 10-DEMA
Q4FY16/TTM 12.98 178.31 12 180.46 167.12 173.79 209.07 179.3
FY17/FWD 15.05 196.25 12 194.31 179.95 187.13 209.07 179.3
FY18/FWD 17.5 215.95 12 209.53 194.04 201.79 209.07 179.3
FY19/FWD 19.95 237.55 12 223.72 207.18 215.45 209.07 179.3
The above incremental growth in EPS is assumed keeping in mind that the
stressed assets of SBI
may be at its peak at around 6.5% GNPA (Rs.98172.80) of total loan book
of around Rs.1509500 cr.
In Q4FY16, the total watch list (doubtful loans) is around Rs.61663 cr
and as par the
management, 70-30% may be turned into future NPA, depending upon the
actual economic recovery in India.
Even if, 50% of that turned sour, it may translate another GNPA of
around Rs.30830 cr and total GNPA figure may touch around Rs.130000 cr
in the coming quarters.
SBI reported a loan recovery of Rs.1724 cr (actual recovery 1627 cr &
upgradation of 97 cr) in
March quarter despite all the efforts and its around 1.76% of GNPA amount.
On the other side, the bank added around 4% of total loan book into
fresh NPL/watch list; i.e. total stressed assets for SBI may stands now
around 10.5% of the loan book.
As par various reports, PSBS may have around 15% stressed assets on an
average (depending upon the size of the bank/loan book) and SBI may not
be an exception.
Now the big question is pace of recovery of our economy and NPAS of the
banking system. If there is uneven or tepid recovery in the real
economy, then a substantial portion of the present "standard assets" may
also fall into future NPAS.
Along with the recovery of economy, some more cuts of the repo rate to a
competitive level with other advanced economies is necessary along with
full rate cut transmission benefits to the borrowers, specially MSME &
corporates. They should get fund from the Indian banking system at
around 4-6% instead of present 10-12% and can compete with their global
peers in a viable way.
As long as we do not have competitive global bank interest rate and our
real rate of interest is high, doing business in India with Indian bank
funds may not be viable and the present NPA mess may also be continued.
But for drastic cut in repo rate, current inflation trajectory may not
be supportive (specially for food and FMCG and house rent/school fees
etc affecting the common people) and structural reform by the Govt is
necessary apart from RBI.
In Q4FY16, actual EPS of SBI was reported as 1.63 against street
estimates of 2.47 (lagged by over 34%).
Although SBI has reported EBITDA/NII better than consensus, it came on
the back of other income and its core banking operations is not very
bright apart from retail banking.
*Analytical Charts:*
<https://1.bp.blogspot.com/-VqO0D-PdnXQ/V0urGVLQyOI/AAAAAAAAHRo/3O8bHqTK8MALJRsVGLxGWPA7zxXG7hvAwCKgB/s1600/SBI-27-05-2016.png>
<https://4.bp.blogspot.com/-bDxcitbxAfE/V0urId-hwrI/AAAAAAAAHRs/dzegGbsoCpsu_ff65zT80H3gR2chKDLywCKgB/s1600/SBI-FIBB-27-05-2016.png>
<https://3.bp.blogspot.com/-CAGxA6yp7vQ/V0urKJki0ZI/AAAAAAAAHRw/ZoSEWb0H0UA3Uh8RZtG40ZGhHSVNqyUrwCKgB/s1600/SBI-WK-27-05-2016.png>
<https://4.bp.blogspot.com/-qyXizHESo8Q/V0urQug5EdI/AAAAAAAAHR0/fhi91nCpElUpzrxA0U5DAie4Oc4dVaBcwCKgB/s1600/SBI-PATTERN-MT-27-05-2016.png>
<https://3.bp.blogspot.com/-BuAP9ZpzJYg/V0urSuXD3dI/AAAAAAAAHR4/thoeNRuNUKkEcXeJVUx0YWHdYizZh9M9QCKgB/s1600/SBI-TL-27-05-2016.png>
<https://3.bp.blogspot.com/-c4qrekGO7P0/V0urU9G7e2I/AAAAAAAAHR8/u_3bc_T_iN0pf0Ar-FMpcvVgvfi4v30gACKgB/s1600/SBI-PATTERN-27-05-2016.png>
--
Thanks & Regards,
Asis Ghosh
(asisghosh.blogspot.com)
NCFM-TA Certified
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