Nomura maintains buy on State Bank of India 330
SBI's 1QFY18
performance was weaker than we expected, with slippages of INR300bn and
INR179bn of slippages from SME/retail/Agri. While higher granular
slippages were expected, the quantum was clearly a negative surprise.
Also a NIM drop of around 40bp q-q was high and guidance of just
10-15bp improvement from current levels is not inspiring. With the weak
show on NIM and asset quality, near-term catalysts are limited, in our
view. The key over the next 6-12 months will be recovery from the
granular accounts (guided INR130bn of recovery/upgrades) and NIM
improvement from current levels.We expect normalised ROEs of around
11.5% by FY20F now and hence maintain our Buy rating. Our TP of
INR330/share implies 1.1x Mar-19F adjusted book.