LISTING |
|
|
Rs 1750 |
|
Rs 2039/ Rs 891 |
|
Rs 10 |
Market Cap |
Rs 108977 crore |
PE Ratio |
12 |
P/BV |
2.9 |
COMPANY OVERVIEW:
On 1st July, 1955 State Bank of India was constituted under the State Bank of India Act 1955 for the purpose of taking over the undertaking and business of the Imperial Bank of India. The Imperial Bank of India was founded in 1921 under the Imperial Bank of India Act 1920.
The State Bank of India is the largest commercial bank in India. The balance sheet size is about Rs7 trillion. The bank along with its associate bank has a network of over 14000 branches across India and control over 18% of the banking business. The government owns 57% of the bank, with FIIs owning 20% (maximum permissible limit). Over the last couple of years SBI has been focusing on drawing significant synergies through an internal consolidation of its associate bank.
PRODUCT MIX:
PRODUCT |
SALE VALUE(crore) |
PRODUCT MIX |
Interest & discount on advance & Bills |
Rs46404.71 |
62.36% |
Income from Investment |
Rs15574.12 |
20.93% |
Income from Brokerage & Commission |
Rs7617.24 |
10.23% |
Income from sales of shares & securities |
Rs2567.29 |
3.45% |
Interest On Balances with RBI and Other Inter Bank Funds |
Rs1474.38 |
1.98% |
Income from dividend |
Rs409.6 |
0.55% |
Others |
Rs335.23 |
0.45% |
Lease Rental |
Rs26.67 |
0.03% |
REASON TO AVOID THE STOCK:
Asset quality shows sign of stress with gross NPL increasing 19% qoq.
Margins are likely to be under pressure.
Management `s focus on increasing the market share may come at the cost of profitability.
We expect inflation to increase to around 3% in FY2010E due to the higher liquidity. The increase in inflation will leave less room for rate cut on other hand government has to resort to rate increase.
The tightening of the regulation on the financial sector will keep the valuation low.
Next phase of opening up of the Indian banking space for foreign players have been postponed indefinitely, may affect the valuation of the banking companies.
Higher NPA will eat into the ROE.
SBI has weight of 4.6% in Sensex. So if there is any correction in the market SBI counter will take hit.
SHAREHOLDING PATTERN:
|
|
NO. OF SHARES |
% OF TOTAL |
PROMOTER |
377207200 |
|
59.41% |
|
INSTITUTION |
153681121 |
|
24.21% |
|
GENERAL PUBLIC |
103991901 |
|
16.38% |
|
GRAND TOTAL |
634880222 |
|
100% |
|
FINANCIAL:
|
|
31/03/06 |
31/03/07 |
31/03/08 |
31/03/09 |
TOTAL INCOME |
43183.62 |
45260.27 |
57645.24 |
76479.22 |
EMPLOYEE EXPENSES |
-8123.04 |
-7932.58 |
-7785.87 |
-9747.31 |
OTHER EXPENSES |
-3602.06 |
-3890.23 |
-4822.74 |
-5901.39 |
INTEREST EXPENSE |
-20159.3 |
-23436.82 |
-31929.1 |
-42915.3 |
GROSS PROFIT |
11299.23 |
10000.64 |
13107.55 |
17915.23 |
PROVISION MADE |
-4393.08 |
-2409.64 |
-2668.65 |
-3734.57 |
PBT |
|
6906.15 |
7591 |
10438.9 |
14180.66 |
TAX |
|
-2499.8 |
-3048.99 |
-3709.78 |
-5059.42 |
PAT |
|
4406.35 |
4542.01 |
6729.12 |
9121.24 |
CHANGE IN TOTAL INCOME: CAGR IN TOTAL INCOME IS 21%.
CHANGE IN GROSS INCOME: CAGR IN GROSS INCOME IS 16.6%
CHANGE IN NET PROFIT: CAGR IN NET PROFIT IS 27.5%.
RATIOS:
|
|
|
31/03/06 |
31/03/07 |
31/03/08 |
31/03/09 |
EPS |
|
|
69.4132 |
71.55025 |
106.0038 |
143.6868 |
GROSS PROFIT MARGIN |
26.16555 |
22.09585 |
22.7383 |
23.42496 |
NET PROFIT MARGIN |
10.20375 |
10.03531 |
11.67333 |
11.92643 |
Key Highlights:
EPS moved up from Rs69 to Rs143 at CAGR of 27.5%.
Gross Profit Margin declined from 26.16% in FY2006 to 23.42% in FY2009.
Net Profit Margin moved up from 10.2% in FY2006 to 11.9% in FY2009.
COMAPRISION OF Q4FY2009 WITH Q4FY2008:
|
|
Q4FY2008 |
% CHANGE |
Q4FY2009 |
TOTAL INCOME |
16393.93 |
34.56% |
|
22060.61 |
EMPLOYEE EXPENSES |
-1569.6 |
|
|
-2349.6 |
OTHER EXPENSES |
-1675.06 |
|
|
-1933.51 |
INTEREST EXPENSES |
-8776.14 |
|
|
-12500.5 |
GROSS PROFIT |
4373.13 |
20.66% |
|
5277.05 |
PROVISION MADE |
-1619.14 |
|
|
-1377.66 |
PBT |
|
2753.99 |
|
|
3899.39 |
TAX |
|
-870.74 |
|
|
-1157.08 |
PAT |
|
1883.25 |
45.61% |
|
2742.31 |
Key Highlights:
Total Income surged by 34.56% in Q4FY2009 as compared to Q4FY2008.
Gross Profit up by 20.66% in the same period.
Net Profit jumped 45.6% in Q4FY2009 as compared to Q4FY2008.
PSU BANK PE RATIO:
BANK NAME |
|
P/E RATIO |
1. ALLAHABAB BANK |
|
4 |
|
2. BANK OF BARODA |
|
7.2 |
|
3. BANK OF INDIA |
|
6.3 |
|
4. CANARA BANK |
|
5 |
|
5. CORPORATION BANK |
5.1 |
|
6. SBI |
|
|
12 |
|
7. PNB |
|
|
6.3 |
|
8. UNION BANK |
|
6.2 |
|
AVERAGE |
|
|
6.5 |
|
VALUATION:
The average PSU Bank valuation is at 6.5X to the trailing twelve months earning. We value SBI at 9X a premium to other PSU bank as it is largest commercial bank in the country. At 9X the SBI stock price come at Rs1290 per share.
We expect correction of 25-30% on the counter.
CONCLUSION:
Investor should avoid the counter as the current run up in the price has made it overvalued. Investor should wait for correction in price before taking exposure on the counter.
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