MOSL: MOrning India (8/August/22): 1. State Bank of India (Treasury drag behind; earnings set to soar); 2. Titan Company; 3. Mahindra & Mahindra; 4. BPCL; 5. Marico
MOrning India (8/August/22): 1. State Bank of India (Treasury drag behind; earnings set to soar); 2. Titan Company; 3. Mahindra & Mahindra; 4. BPCL; 5. Marico
Today’s top research idea
State Bank of India: Treasury drag behind; earnings set to soar
- SBIN reported a 14% YoY growth in core PPOP. However, higher treasury losses (INR65.5b) dented earnings, which declined 7% YoY to INR60.7b.
- NII stood a tad weaker. However, the outlook remains encouraging as the bank benefits from the re-pricing of its floating rate loan portfolio, amounting to 74% of total loans. We expect NII to grow at an average 16% over FY22-24.
- Despite a rise in fresh slippages to INR101b, the GNPA/NNPA ratio declined marginally by 6bp/2bp QoQ to 3.91%/1% in 1QFY23, led by recoveries and upgrades. The restructured book fell to 1% of loans.
A higher than expected treasury loss resulted in a marginal cut to our FY23 earnings estimate. However, we expect SBIN to report a strong earnings progression right from 2QFY23, resulting in 29% earnings CAGR over FY22-24. We estimate a RoA/RoE of 0.9%/17% in FY24. SBIN remains one of our conviction Buy in the sector
Piping hot news
Steel players expect government to withdraw export duty; to go ahead with capex plans
The export duty imposed on certain steel products recently will not force steel makers to review their capital expenditure plans as top producers expect it to be a "short-term" move to stabilise inflation. On May 21, the government hiked the duty on exports of iron ore by up to 50 per cent and for a few steel intermediaries to 15 per cent. It also waived customs duty on the import of some raw materials, including coking coal and ferronickel, used by the steel industry.
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