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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