New Delhi: The shares of State Bank of India are currently undervalued and will see an appreciation very soon, said the bank's Chairman and Managing Director Mr G G Vaidya at the launch of India Millennium Deposits Scheme. The current low valuation is because the investors are sceptical about the management's ability to carry out the modernisation programme of India's largest bank and keep up with their promises, he added.The SBI stock had dropped to its 52 week low on Tuesday, touching Rs 158.70, before closing at Rs 160 with a price to earning ratio of 3.9. Looking at the grim conditions, the bank has also dropped its plan to raise funds from the capital market and instead, has decided to go for subordinate debt route. According to Mr Vaidya, the SBI stock should fetch a PE ratio of about 12 as compared to the current 4 to 5.
He also added that the bank's modernisation and the technology upgradation plans are in final stages and within the next three months the investors will see the results. The State Bank will shortly launch products like an ATM network, integration with credit cards, internet banking at major branches and networking of about 300 to 400 branches.
The bank's voluntary retirement scheme is also likely to be finalised in the next three months, on the lines of the one being finalised by Indian Banks Association. SBI currently has over two lakh employees. Further, the venture in the life insurance sector, will also pull away many employees. The joint venture partner will be decided by the next month.
This will boost the sentiments on the SBI counter and witness a rise in the prices, Mr Vaidya opined.
He also clarified the doubts about the India Millennium Deposits scheme's profitability, which has seen SBI's stock prices being pulled down in the recent days.
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