Mumbai: Morgan Stanley and Bank of America-Merrill Lynch cut their target price on State Bank of India after the country’s largest lender posted an unexpected slump in quarterly profit.
Morgan Stanley cuts its price target to Rs2,000 from Rs2,450 and said the stock was unlikely to perform when net interest margins were falling. It kept its “underweight” rating on the shares.
BofA-Merrill lowered its price target on SBI to Rs2,950 from Rs3,400 and maintained its “buy” rating on the stock.
Goldman Sachs upgrades SBI to neutral
Goldman Sachs has upgraded State Bank of India to “neutral” from “sell”, despite weak earnings, saying it expected the bank’s margin could improve in the first quarter of FY12.
However, it cut the 12-month price target to Rs2,650 from Rs2,700 to factor in a fall in earnings estimates.
Also Read | • SBI’s profit plunges 99% on ‘clean-up’
Mark to market • SBI: the elephant takes a nasty tumble
“In our view, SBI’s recent valuation correction and measures taken by management, which we believe will help margins, warrants a neutral rating on the stock,” the Wall Street investment bank said in a note.
On Tuesday, SBI’s fourth quarter profit was almost wiped out by what the new chairman of the country’s largest lender referred to as a “one-time clean up” —higher provisioning towards sticky assets and retirement benefits.
The state-owned bank’s worst performance since reporting a Rs115.2 crore loss in the third quarter of 1999-2000 sent its stock tumbling.