X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
SBI: Deserves a look - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jan 31, 2001

    SBI: Deserves a look

    State Bank of India has reported a drop of 45% in net profit to Rs 2.2 bn for the quarter ended December 2000. However, profit before tax of the bank grew by 16% on the back of higher operating margins and cost efficiencies. Operating margins of the bank during the quarter were higher by 68 basis points due to abolition of interest tax from April 2000.

    (Rs m) 3QFY00 3QFY01 Change
    Interest Income 56,178 64,320 14.5%
    Other Income 8,266 8,306 0.5%
    Interest Expenditure 39,606 44,905 13.4%
    Operating Profit (EBDIT) 16,572 19,415 17.2%
    Operating Profit Margin (%) 29.5% 30.2%  
    Other Expenditure 15,157 16,475 8.7%
    Profit before Tax 9,682 11,246 16.2%
    Provisions & Contingencies 3,635 8,209 125.8%
    Tax 2,042 837 -59.0%
    Profit after Tax/(Loss) 4,005 2,201 -45.1%
    Net profit margin (%) 7.1% 3.4%  
    No. of Shares (eoy) 526 526  
    Diluted Earnings per share* 30.4 16.7  
    P/E (at current price) 7.4 13.5  
    *(annualised)      

    Earnings for the quarter declined due to more than 125% jump in provisions and contingencies. During the quarter SBI has provided an amount of Rs 4.6 bn towards the estimated one time issue expenses of India Millennium Deposits, to be redeemed at the end of five years, in the year 2005-06. These expenses are included in provisions and contingencies.

    SBI's deposits for the nine months period ended FY01 grew by 13% while advances rose by 22%. Credit to deposit ratio of the bank also increased to 57% (from 53% ) during the same period.

    The bank has received more than 27,000 applications for its VRS scheme. However, it has not decided as yet on the manner of absorbing this cost. If it decides to write off the VRS expenses, profits will take a hit in March 2001. Nevertheless, the bank's returns on equity will improve substantially in FY02 and FY03.

    During the quarter, SBI has incorporated a subsidiary SBI Life Insurance Company for doing life insurance business, in which it will hold 74% equity. It has also identified Cardif S.A. of France to be the joint venture partner who will hold 26% equity in the company. The returns from its investments would come only after 3-4 years.

    At the current market price of Rs 226 SBI is trading at a P/E multiple of 4 times its FY02 earnings and Price/Book value ratio of 0.8 times. Its current valuations are lowest among its peers in the sector. With its focus on reducing the level of NPAs and technology adoption, re-rating in the stock is likely.

     

     

    Equitymaster requests your view! Post a comment on "SBI: Deserves a look". Click here!

      
     

    More Views on News

    Insider at It Again. This Time Stealing from Buffett and Berkshire (The 5 Minute Wrapup)

    Aug 12, 2017

    What is Equitymaster Insider Ankit Shah stealing from Berkshire's success?

    The Pied Pipers of 'Buy High, Sell Higher' (The 5 Minute Wrapup)

    Jul 14, 2017

    What should you make of Ola drivers turning day traders and Radio Jockeys giving opinion on the Sensex?

    SBI: Merger Pushes up Bad Loans (Quarterly Results Update - Detailed)

    May 23, 2017

    State Bank of India (SBI) ended FY17 on a healthy note but concerns on bad loans from associate banks remain.

    IDFC Bank: Strong Trading Income Shields Credit Slowdown (Quarterly Results Update - Detailed)

    Aug 10, 2017

    IDFC Bank is taking steps to address contracting NIMs and successfully transition in to a retail bank.

    ICICI Bank: Loan Slippages Trending Downwards (Quarterly Results Update - Detailed)

    Aug 10, 2017

    Asset quality will be the key thing to watch out for going forward.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    SBI SHARE PRICE


    Aug 16, 2017 (Close)

    TRACK SBI

    SBI - ALLAHABAD BANK COMPARISON

    Compare Company With Charts

    COMPARE SBI WITH

    MARKET STATS