Buy SBI on dips and add to your Portfolio

With its surplus liquidity and balance sheet size, SBI is expected to be a major beneficiary of pickup in credit demand going forward. Its non banking subsidiaries -- SBI Capital Markets, SBI Mutual Fund and SBI Life Insurance -- will benefit from uptick in capital markets. Its mammoth branch network (most of it already under Core Banking Solutions), increasing contributions from fee-based activities, comfortable capitalisation, a well-diversified loan book and high proportion of low-cost deposits remain investment positives for the bank.

“At current market price it trades at 2x of its FY10E adjusted book value. In the banking sector it remains our preferred pick and should be bought on any significant fall,” says Kapur.


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TA - SBI 27-04-09

SBI

SBI declined sharply from the resistance at Rs 1,350 indicated last week to an intra-week trough at Rs 1,202.

But the strong recovery from this level implies that the medium term trend in the stock continues to be up. Though the stock can move between Rs 1,200 and Rs 1,350 for a few more sessions, there can be an upward break-out that takes it higher to Rs 1,433 or Rs 1,577.

Investors however need to tread cautiously till the stock closes above Rs 1,350.

The medium-term view for SBI will stay positive as long as it trades above Rs 1,100.

Repeated attempts to cross above Rs 1,600 between July and September 2008 makes this level a possible ceiling for this calendar.

— Lokeshwarri SK

businessline 27-04-09

SBI is struggling to get past 1350 and is likely to drift lower.  Investor should buy the stock around Rs.1250 levels for a target price of Rs.1600 for a holding period of 6 months.

Equity Research Team

Intelligent Investor -

Invest Advisory Arm of

Ravina Consulting

Bangalore India

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Technical Analysis - SBI 27 April 09

SBI declined sharply from the resistance at Rs 1,350 indicated last week to an intra-week trough at Rs 1,202.

But the strong recovery from this level implies that the medium term trend in the stock continues to be up. Though the stock can move between Rs 1,200 and Rs 1,350 for a few more sessions, there can be an upward break-out that takes it higher to Rs 1,433 or Rs 1,577.

Investors however need to tread cautiously till the stock closes above Rs 1,350.

The medium-term view for SBI will stay positive as long as it trades above Rs 1,100.

Repeated attempts to cross above Rs 1,600 between July and September 2008 makes this level a possible ceiling for this calendar.

— Lokeshwarri SK

businessline 26-04-09

Technical Analysis - SBI

SBI

SBI shattered the resistance in the band between Rs 1200 and Rs 1220 and almost achieved our break-out target of Rs 1368. It was one of the stronger performers among the pivotals, with 15 per cent weekly gain. Short-term support for the stock is at Rs 1250 and Rs 1180. Short-term traders can hold the stock as long as it holds above the first support. But it faces strong resistance from the band between Rs 1350 and Rs 1370.

The medium-term view for SBI has however turned positive after last week’s move. If this is a counter-trend rally correcting the down-move from January 2008 peak, the first target is Rs 1356 and the next target is Rs 1476. Fresh longs are advised only on a strong move above Rs 1350.

— Lokeshwarri S.K.

businessline 19-04-09

SBI - Short term buy n sell

SBI

SBI continued to face selling pressure at higher levels. The stock could not get past the resistance band between Rs 1,200 and Rs 1,220 indicated in our previous column.

A short-term consolidation in the range between Rs 1,050 and Rs 1,250 is possible for a few more sessions before the stock garners strength to move higher. The positive medium-term outlook will however get roiled on a close below Rs 1,000.

SBI is currently struggling to make headway and our medium-term view for the stock is neutral. Inability to move past Rs 1,250 over the next couple of weeks would imply that the stock could re-test its March lows over the medium- term. Medium-term target on a break above Rs 1,250 is Rs 1,368.

Lokeshwarri S. K.

Businessline 12-04-09

Our View :

One should buy on Monday as the previous closing has volume expansion and is likely to test Rs.1250 

Technical Analysis - SBI

Technical Analysis - SBI

It was a week of wild gyration for SBI. The stock plummeted below Rs 1,000 to Rs
980 before reversing sharply to close the week with a 2 per cent gain. The
bullish hammer in the weekly candlestick chart coming close on the heels of the
morning-star implies that buyers are eager to buy in declines. If the third leg
of the move from Rs 894 trough is unfolding currently, the targets for the stock
are Rs 1,220 and Rs 1,368. Investors with a medium term perspective can hold the
stock as long as it sustains above Rs 1,000.

Short-term resistance exists in the zone between Rs 1,200 and Rs 1,220. Traders
can book partial profit as the stock approaches this band. Supports for the week
would be at Rs 1,098 and Rs 1,051.

— Lokeshwarri S.K.

businessline 06-03-09

Technical Analysis - SBI

SBI moved contrary to our expectation; surging beyond the resistance at Rs 1,000 to a weekly gain of Rs 172. As we have been reiterating in our past columns, the stock has strong long-term support around Rs 1,000 and the formation of a morning star pattern in the weekly chart denotes that a sustainable trough could be in place in this stock. Immediate targets for the stock are Rs 1,170 and then Rs 1,270. The long-term 200-day moving average present at the second resistance will be the key resistance for the medium term.

The short-term view for the stock is positive since it recorded a strong close on Friday. Supports for the week would be at Rs 1,060 and Rs 1,040. Short-term traders can play long till SBI trades above the first support.

Lokeshwarri S. K.

SBI - Buy

 Fresh investments can be considered in the State Bank of India stock.  Beaten down valuations, SBI’s increasing market share in deposits, which gives it leeway to reduce costs, and higher pricing power to attract borrowers make the PSU banking giant a good investment option.  

SBI’s mammoth branch network (most of it already under Core Banking Solutions), increasing contributions from fee-based activities, comfortable capitalisation, a well-diversified loan book and high proportion of low-cost deposits (36.7 per cent of total deposits) are other advantages for SBI.  At current market price of Rs 952, the stock trades at less than its expected FY09 book value of Rs 965 and at 7 times its trailing one-year standalone earnings.  

SBI has grabbed the first mover advantage in reducing lending rates. Having pegged its home loan rates at 8 per cent for the first one year (loans less than Rs 20 lakhs), it also cut rates on SME, auto and secured farm loans.  While this may aid growth in the advances book, it may not significantly reduce margins as SBI’s cost of deposits (5.95 per cent for December quarter) is significantly lower than the yields from these advances. Higher lending volumes may also more than compensate for the lower rates, maintaining profitability. 

For the first nine months of this fiscal, SBI’s net profit grew by 31.6 per cent, even as net interest margins were maintained at 3.16 per cent, due to higher yield on assets. The increase in other income was aided by service charges and treasury gains.  The credit-deposit ratio of the bank fell from 71 per cent to 67.6 per cent for the quarter ended December 31, 2008 partly due to the huge surge in deposits as investors found the bank to be a safe haven. 

SBI’s deposit growth (36 per cent in a year), unlike its peers, outpaced loan growth (29 per cent).  Though recent deposit rate cuts will be reflected only with a lag, high CASA allows the bank considerable leeway in reducing lending rates. SBI’s asset quality slippages are not low, with gross non-performing assets at 2.6 per cent of the total assets. Lesser provision coverage of 48.4 per cent also limits the shield against future slippages. The bank has already restructured some SME accounts and may have to restructure more advances.  T

he credit card defaults of the bank have put further pressure on the asset quality. In the current context, the next 2-3 quarters may see some slippage in the asset quality, but this is unlikely to lead to a systemic crisis. Though fee income may sustain, treasury gains may be limited by hardening bond yields. Consolidation of all State Bank subsidiaries will help the bank corner more than a quarter of share in total banking business.  

M.V.S Santosh Kumar 

businessline 15-03-09