Thread by @phoenixcapindia

#SBI - Potential #Turnaround play in #PSUBank space.

Brief Overview

CMP - 323
Market cap - 2.88 lakh crs

SBI is the largest state owned bank in India having an #AUM of 25 lac cr

PSU banks have had a rough 5 odd years owing to abnormal rise in #NPAs arising from mostly the 2004 to 2014 era.

SBI has spent 5 years from 2014-19 to provide for all the toxic assets and #badloans.

Their #Provisions alone for the last 4 years have been a massive 2.3 lac cr, equals the size of entire loan book of Kotak Bank.

Their provisions in most #NCLT 1 cases are at 100 percent.

Mgmt expectation - SBI to recover 40% of total NCLT cases in next 3 yrs i.e. about 90k cr

Their #PCR (Provision Coverage Ratio) is at 81%. This number was 61% in 2016.

SBI has significantly strengthened their #balancesheet to handle future asset quality stress.

In FY19/20, SBI has absorbed and comfortably provided for all the exposure in IL&FS, DHFL, Jet & Idea

They have 33 cr #DebitCards in circulation which equals to a 1/4th of the entire population of India. 1.2 cr #CreditCards. #SBICards can also add as a key trigger in the near term.

Their blended cost of funds comes to only 5% so they have a significant advantage over most banks.