SBI gains 2%, rises to 9-month high on overseas bond issue

Written by fe Bureau | Mumbai | Updated: Apr 11 2014, 22:00pm hrs
The scrip of State Bank of India (SBI) rose more than 2% on Thursday to its highest level in over nine months and trading volume increased over 30% compared with the average 30-day volume, after the bank raised up to $1 billion in international investments.

The scrip settled 1.99% or R39.50 higher at 2,024.50 on the NSE. Over 32 lakh shares were traded on BSE and NSE compared with an average 25.92 lakh shares traded in the previous 30 session on both the exchanges. In contrast, Bank Nifty ended up 0.1% and the benchmark Nifty settled 0.27% lower from the previous close.

Analysts are bullish on the stock citing attractive valuations and say the scrip is best placed to benefit from persistent capital inflows and hopes of upturn in the economic cycle. Even at 1.1 times its current price-to-book (P/B) value, the stock is attractively priced.

Enviable liability franchise (SA ratio of ~35%), adequate capitalisation (tier-I of 10% after recent equity infusion), and lowest net stress loans (6.7%) position SBI as best placed to benefit from an upturn in the economic cycle... Core operating profitability is likely to bottom out in FY14, said Alpesh Mehta, analyst, Motilal Oswal Financial Services.

The rally is not restricted to SBI alone. Other major state-owned banks like Punjab National Bank (PNB) and Bank of Baroda (BOB) have also seen the positive momentum on the back of consistent capital inflows.

Foreign institutional investors (FIIs), who have been betting heavily on BJP's prime ministerial candidate to lead the next government, have been aggressively buying Indian shares. Overseas funds have pumped in $5.1 billion since the recent rally began in February 12.