INSUBCONTINENT EXCLUSIVE:
Mumbai: Morgan Stanley has raised its price target on State Bank of India by 14 per cent to Rs 375 citing better performances of its
subsidiaries — mutual fund, life insurance and cards businesses.
The brokerage, however, has retained its ‘equal weight’ rating on the
stock because of continued uncertainty about asset quality.
“All three large subsidiaries (AMC, Cards, Life) continue to gain market share
and improve profitability,” said Morgan Stanley’s analysts led by Sumeet Kariwala in a client note
“SBI’s subsidiaries now contribute around 35 per cent of current market capitalisation and this provides strong support to the stock,”
the note added.
SBI shares rose 0.5 per cent to close at Rs 328.25 on Wednesday
BSE’s Bankex declined about 0.5 per cent, while the Sensex fell close to 1 per cent.
SBI Cards and Payments’ Rs 9,500-crore initial
public offering, which will open on March 2, is expected to fetch the state-owned bank about Rs 2,800 crore
The share sale will include up to 3.73 crore share sale by SBI and up to 9.32 crore shares by Carlyle Group.
SBI Mutual Fund emerged as the
biggest asset management company in the country in January with total assets under management (AUM) of Rs 3.82 lakh crore.
SBI Life
Insurance shares have gained almost 60 per cent in a year.
Morgan Stanley said though SBI shares are inexpensive at 0.7 times FY21 estimated
book value, there is limited scope for re-rating given uncertain asset quality outlook.
“Unless the macro recovers, we expect confidence
around earnings outlook to remain low and constrain re-rating,” the brokerage said
“We see significant asset quality uncertainty amid rising rating defaults and increasing asset quality stress in the MSME/agri
segment.”
Morgan Stanley said as many financial firms are struggling in the country, there is a risk that the state-owned lander may have
to help some struggling entities.
