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Thursday, October 29, 2009

State Bank of Travancore:Is it a buy/hold/sell,analysis and future prospects

Scripscan:State Bank of Travancore

Story:State Bank of Travancore (SBT), is a subsidiary of the State Bank Group and also has private share-holders. It the premier bank of Kerala State, India, where it has 580 branches. Overall, SBT has a network of over 712 branches spread over 16 Indian states.The bank provides a range of banking products, which includes the products aimed at Keralites who are working abroad. The bank possess a computerized core banking solution. SBT's total business reaches at Rs.66644 crores, in which the NRI business touched Rs.8755 crores.In the past 9 years SBT"s business grew at 20% CAGR and net profit about 25% CAGR.Bank has been able to maintain its ROE at 20% and margins at about 30%.Gross and net npa reduced drastically from 6.7 and 3.1% in fy03 to 1.6% and 0.6% in fy09 respectievely.Going forward we expect its business to grow at 18% in fy10-fy11.We have assume net interest income growth of 16-18% in fy10-fy11 and np growth of 15-16%in fy11.At current market price stock is available at 0.8 fy11 apv and PE of 3x fy11,which is very attractive given its strong ROE of 25%+ and ROA of 1.3%.We initate a coverage rating with a buy recomendation on the bank with a target price of 1200rs.The key positive factor that makes the bank a good buy are well managed asset quality,stron busines growth,well capitalised with a CAR of 14% and tier 1 of 9%,High margins,high CASA share,strong network base and very high franchise value coupled with 3% dividend yield.

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This blog does not share personal information with third parties nor do we store any information about your visit to this blog other than to analyze and optimize your content and reading experience through the use of cookies.You can turn off the use of cookies at anytime by changing your specific browser settings.This privacy policy is subject to change without notice and was last updated on 20.3.2013. If you have any questions, feel free to contact me directly here: Investment in equity shares has its own risks.Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that I consider reliable. I,however,do not vouch for the accuracy or the completeness thereof.This material is for personal information and am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.The stock price projections shown are not necessarily indicative of future price performance.The information herein, together with all estimates and forecasts, can change without notice.

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