state bank of india-analysis by
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Stock Analysis
Stock Analysis – State Bank of India
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ank of India
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CONTENTS
Introduction
Company profile
Financials
Fundamental analysis
Peer Group Analysis
Fundamental factors
SWOT Analysis
Technical Analysis
Pivot Point
Daily chart
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Introduction The evolution of State Bank of India can be traced back to the first decade of the 19th
century. It began with the establishment of the Bank of Calcutta in Calcutta, on 2 June
1806. The bank was redesigned as the Bank of Bengal, three years later, on 2 January
1809. It was the first ever joint-stock bank of the British India, established under the
sponsorship of the Government of Bengal. Subsequently, the Bank of Bombay
(established on 15 April 1840) and the Bank of Madras (established on 1 July 1843)
followed the Bank of Bengal. These three banks dominated the modern banking
scenario in India, until when they were amalgamated to form the Imperial Bank of India,
on 27 January 1921.
The State Bank of India emerged as a pacesetter, with its operations carried out by the
480 offices comprising branches, sub offices and three Local Head Offices, inherited
from the Imperial Bank. Instead of serving as mere repositories of the community's
savings and lending to creditworthy parties, the State Bank of India catered to the needs
of the customers, by banking purposefully. The bank served the heterogeneous
financial needs of the planned economic development. The corporate center of SBI is
located in Mumbai. In order to cater to different functions, there are several other
establishments in and outside Mumbai, apart from the corporate center. The bank
boasts of having as many as 14 local head offices and 57 Zonal Offices, located at
major cities throughout India. It is recorded that SBI has about 10000 branches, well
networked to cater to its customers throughout India.
State Bank of India is the country’s largest commercial bank in term of profit, assets,
advances, deposits, branches and employee. SBI played a extremely important role in
developing India, providing the financing needed to modernize the country’s agriculture
industry and develop new irrigation method and backing the creation of dairy farming as
well as pork and poultry industry. The Bank also provides the backing for the
development of country’s infrastructure.
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STOCK INFORMATION
Sector Banking
Market cap Rs.162327 cr
Face value Rs. 10
Book Value Rs. 1309.47
EPS(ttm basis) Rs. 184.16
52 week H/L Rs. 3515/ 1863
AVG. Daily vol (2wk) 5.07/9.05 lacs
Credit- Deposit 76.11%
Dividend 16.29%
Managing Director R Sridharan
Listed At NSE/BSE
Equity capital Rs. 634.88 cr
SHARE HOLDING PATTERN
(in %) 11-Mar 10-Dec 10-Sep
Promoter 59.4 59.4 59.4
FII 12.8 13.36 13.99
DII 16.57 15.59 15.54
Others 11.23 11.65 11.07
Total 100 100 100
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Financials
Quarterly results (Rs in crores)
Particulars Dec-10 Sep-10 Jun-10 Mar-10
Interest Earned 21412.79 19808.09 18452.12 17965.59
Operating Expenses 17962.25 17456.29 16007.72 17280.24
Operating Profit Before Prov.
& Cont. 6764.48 6357.01 6134.36 5193.88
Provisions & Contingencies 2051.51 2621.47 1551.37 2349.4
Depreciation 0 0 0 0
Provision for Taxes 1884.91 1234.17 1668.79 977.88
Deferred Tax 0 0 0 0
Net Profit 2828.06 2501.37 2914.2 1866.6
Extra-ordinary Items 0 0 0 0
Adjusted Profit After
Extra-ordinary item 2828.06 2501.37 2914.2 1866.6
EPS (Unit Curr.) 44.54 39.39 45.9 29.4
EPS (Adj) (Unit Curr.) 44.54 39.39 45.9 29.4
Calculated EPS (Unit Curr.) 44.54 39.39 45.9 29.4
Calculated EPS (Adj) (Unit
Curr.) 44.54 39.39 45.9 29.4
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Calculated EPS (Ann.) (Unit
Curr.) 178.15 157.57 183.61 117.6
Calculated EPS (Adj) (Ann.)
(Unit Curr.) 178.15 157.57 183.61 117.6
Book Value (Unit Curr.) 0 0 0 0
Dividend (%) 0 0 0 0
Equity 635 635 634.88 634.88
Reserve & Surplus 71599.83 71599.83 65314.32 65314.32
Face Value 10 10 10 10
Public Shareholding (No
Of.Shares) 257790915 257790915 257676309 257675444
Public Shareholding (% in
Equity) 40.6 40.6 40.59 40.59
(%) of shares held by GOI 59.4 59.4 59.41 59.41
Non Encumbered - No. of
Shares 377207200 377207200 377207200 377207200
Non Encumbered - % in
Total Promoters Holding 100 100 100 100
Non Encumbered - % in
Total Equity 59.4 59.4 59.41 59.41
PBIDTM(%) 79.75 77.89 85.26 78.42
PBDTM(%) 22.01 18.86 24.84 15.83
PATM(%) 13.21 12.63 15.79 10.39
Capital Adequacy Ratio 11.95 12.05 12.17 12
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Tier I Capital 8.69 8.8 8.79 8.5
Tier II Capital 3.26 3.25 3.38 3.5
Gross Non Performing
Assets 23437.75 23204.59 20825.22 19534.89
Net Non Performing Assets 11695.14 11601.23 11074.37 10870.17
(%) Gross Non Performing
Assets 3.17 3.35 3.14 3.05
(%) Net Non Performing
Assets 1.61 1.7 1.7 1.72
Return on
Assets(Annualised) 0.94 0.87 1.07 0.69
Fundamental analysis
Peer group comparison (Rs in cr.)
SBI HDFC Bank ICICI Bank PNB
Sales 70,993.92 16,172.91 25,706.93 21,466.91
PAT 9,166.05 2,948.69 4,024.98 3,905.35
Equity 634.88 457.74 1,114.89 315.30
Ratios
OPM
% -- -- -- --
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NPM
% 12.91 18.23 15.66 18.19
RONW 13.90 13.70 7.80 24.06
EPS 144.37 67.60 36.14 123.86
CEPS 144.37 64.42 36.10 123.86
PE -- -- -- --
PB 2.00 4.06 2.07 1.96
BV 1,038.77 470.13 462.99 514.78
Ownership 40,613.00 40,613.00 40,887.00 40,613.00
Promoter &
Promoter Grp 37,72,07,200 10,86,43,220 -- 18,37,50,957
Indian 37,72,07,200 10,86,43,220 -- 18,37,50,957
Foreign -- -- -- --
Public 25,77,91,791 35,65,82,464 1,15,14,22,189 13,30,61,200
Institution 18,64,85,869 18,67,44,925 72,29,78,666 11,66,02,784
FII 8,12,72,949 13,27,23,097 45,18,88,143 6,12,33,891
DII 10,52,12,920 5,40,21,828 27,10,90,523 5,53,68,893
Non Institution 7,13,05,922 16,98,37,539 42,84,43,523 1,64,58,416
Bodies
Corporate 1,53,63,954 4,05,52,046 4,37,84,408 37,38,556
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Fundamental Factors
Nation Wide Presence
SBI provides a range of banking services through its vast network of branches in India
and overseas. The State Bank group with a network of 17337 branches including 4841
branches of its six associates Banks dominates the banking industry. In addition to
banking, the Group, through its various subsidiaries, provides a whole range of financial
services which include life insurance, merchant banking, mutual fund, credit cards,
factoring, security trading, pension fund management and primary dealership in the
money market. SBI has seven associates’ banks, “State Bank of Bikaner & Jaipur, State
Bank of Hyderabad, State Bank of Indore, State Bank of Mysore, State Bank of
Sourashtra and State Bank of Travancore”. But now SBI has only five associate’s banks
that with SBI constitute the State Bank group. Acquisition of State Bank of Indore added
470branches to SBI’s existing network of 12448 and over 21000 ATMs.
Overseas expansion
The number of foreign offices increased from 92 as on 31st March 2009 to 142as on
31st March 2010 spread across 32 countries. The offices comprised 42branches, 8
representative offices, 2 sub offices, 2 extension counters, 82offices of the six foreign
banks subsidiaries, an associates (Bank of Bhutan), equity investments in a foreign
bank (Sterling Banks, Nigeria) and 2 managed exchange companies. Advances and
Deposits of the bank expected to increase from its foreign branches because SBI has
opened two more branches in overseas market in current financial year.
Rising Operating Performance
During the quarter, advances of the bank increased by 4.2% qoq and 15.87% . Deposits
grew by 4.9% qoq and 10.7% YOY on the back of healthy 27.7% growth in CASA
deposits. The CASA ratio of the Bank increased by30bp to 47.8% on the quarter
ended September 30, 2010.
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Comfortable CAR
Capital adequacy ratio as per the Basel ii norms of the bank is 13.39% at the end of the
March 2010 with Tier-I at 9.45%. The capital adequacy of the bank is high as compare
to the minimum mandatory requirement of 9%. The SBI is planning to raise Rs.20000cr
through a right issue in last quarter of this fiscal. It would be increase the capital
adequacy of the Bank Industrial Demand Gross Advances of the bank grew by Rs. 92940cr, a growth of 16.94% from s.548540cr
in March 09 to Rs. 641480cr in March 2010. Consolidated advances of the bank grew
by 15.88% from 750362.38cr in March 2009 to Rs.869501.63cr. SBI advances expected
to increase by 20% in financial year 2011and 22.4% in financial year 2012 because of
the industrial demand and more infrastructure funding by the bank. GOI is planning to
invest around $1tr in next five year plan.
Bank’s advances are highly correlated to the overall performance of the economy in
tune to the industrial performance. Industrial demand for the loan will be remain high in
near future because of the more industrial output d government spending. Gross
advances of the Bank grew by 19.47% from Rs. 580237cr as on quarter ended
September 30th2009 to Rs. 693224cr as on quarter ended September 30th 2010.
Increase in CASA due to higher deposit rate Deposits of the Bank went up by Rs. 62043cr, a growth of 8.36% from RS .742043cr in
March 2009 to Rs. 804116cr in March 2010 driven by CASA Growth of 26.76%.
Consolidated deposits of the bank grew BY 10.32% from Rs..1011988.31cr as on
March 31, 2009 to Rs. 116464.50cr as on March 31, 2010.
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Deposits of the bank expected to grow by 15% in current fiscal and around 19% in
Fiscal 2011-12 because of the soaring deposits rate by the bank. State Bank of India
has increased its deposits rate by 100 -50 bp. Deposits of the bank went up from
772904cr in September 09 855345cr in September 10 recording a YOY growth of
10.67%.
Net Interest Income increased by 45.59 % IN Q2 Net Interest Income of the bank increased by 45.59% as on quarter ended September
30, 2010 against a growth of 4.69% as on quarter ended september30, 2009. Interest
expenses on deposits of the bank decreased by 4% during the quarter September 30,
2010 against a growth of 13.93% during Q2FY09, through strategic shedding of high
cost bulk deposits and growth in CASA deposits.
Net Interest Income of the bank will be increase in future because of the advance of the
bank is rising state bank of india has increased its base rate to 7.755 and BPLR by
25bp. It would be increase the interest income of the bank. The Bank’s reported NIM
has been witnessing an upward trend since hitting a low 2.30% in 1QFY2010, from
which it has improved by 113bp to 3.43% in2QFY2011.
We expect the NIM of the bank will be increase because of the increase in the interest
income of the bank. Total Non-interest income of the bank up by 13.62% despite profit
on sale of investments coming down by 63.82% (Rs. 348cr). Non Interest Income
excluding profit on sale of investment is up by 27.80%. Fee Income of the Bank went up
by 40.04% YOY in Q2FY11, driven by robust growth in cross selling commission on
LC/BG and government business.
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SWOT ANALYSIS
Location of Factor TYPE OF FACTOR
Favorable Unfavorable
Internal
Strengths
• Strong domestic market position sustaining reach and customer confidence
• Strong capital position helping pursue growth initiatives
• SBS merger further hastens SBI and its associate banks merger and helping defend its leadership position
Weaknesses
• Reduction in the asset quality increasing non performing asset’s ratio
• Susceptible to political interventions
External
Opportunities
• SBI could be the highest beneficiary from the increasing adoption of E-transactions
• Investments in information technology will decrease transaction costs of SBI
• New business initiative will expand the market share and increase the revenues
• Growth in general insurance industry will help increasing the market share
Threats
• Opening of Indian banking sector will cause intense competition
• Global economic slowdown could reduce demand for banking services in India
TECHNICAL
SBI CMP – Rs. 2819
Moving averages
Moving Averages
Daily
Weekly
Weekly Pivot
SCRIPT R4 R3
SBI 3016 2945
ECHNICAL VIEW
Target Price – Rs.
20 Day 50 Day 100 Day
2721.39 2677.53 2702.09
2694.36 2714.80 2367.99
R2 R1 P S1 S2
2874 2846 2803 2775 2732
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Rs.3000
200 Day
2814.35
1952.19
S3 S4
2661 2590
State bank of India has formed a head and shoulder pattern in daily chart. The head
and shoulder pattern is generally
seen in uptrend. It is also most
India is further supported by RSI in daily
the stock has potential to go up. The stock is consolidating around 2700
just below the 200 days moving average
the break out of head and shoulder
continue its uptrend and test the level of 300
On weekly chart, the stock has
and there on forming an uptrend on support line drawn from troughs o
then, it is above 50 days moving average
2700- 2850, further supported by RSI which is
upper resistance line at around 3000
has formed a head and shoulder pattern in daily chart. The head
is generally regarded as a reversal pattern and it is
seen in uptrend. It is also most reliable when found in uptrend as well. State bank of
is further supported by RSI in daily chart and it is around 60.97 which
go up. The stock is consolidating around 2700
w the 200 days moving average and if it breaches the head at around
the break out of head and shoulder and stock above 200 DMA, we expect stock to
continue its uptrend and test the level of 3000.
he stock has retraced back from its all time high of 3500 to 2450 level
and there on forming an uptrend on support line drawn from troughs of July 2009.
then, it is above 50 days moving average and if it breaches this consolidation rang
further supported by RSI which is 53.93; stock has potential to test the
tance line at around 3000.
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has formed a head and shoulder pattern in daily chart. The head
regarded as a reversal pattern and it is most often
found in uptrend as well. State bank of
which show that
go up. The stock is consolidating around 2700-2850 which is
around 2840, on
we expect stock to
back from its all time high of 3500 to 2450 level
July 2009. From
this consolidation range of
tential to test the
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