State Bank of India figured in the biggest gainers among BSE Sensex stocks on Wednesday on institutional buying support, following hopes that the state-run bank may come out with good Q4 and FY 2002-03 results.
The stock of India's largest commercial bank edged higher by 0.54% at Rs 286, recovering from its low of Rs 283.20. Over 310,000 shares changed hands on the counter by 13:10 IST. In seven sessions, the State Bank of India scrip rose by 7.25% from Rs 266.65 on 31 March 2003.
As per market buzz, CL Securities was an active buyer on the SBI counter.
Dealers said that SBI is expected to announce good results for the quarter as well as year ended 31 March 2003. Analysts expect the bank to record a net profit growth of 13-23.5% at Rs 695-740 crore (Rs 6.95-Rs 7.4 billion) for the quarter ended 31 March 2003.
The optimism on the SBI counter is due to the recovery of funds by the bank in securities transactions. Last week, there were reports that SBI has recovered a further sum of Rs 124.80 crore (Rs 1.24 billion) during 2002-03 through legal cases filed for recovery in securities transactions pertaining to the year 1991-92. These recoveries shall be accounted for at the time of finalisation of accounts for the year 2002-03.
The enactment of the Securitisation Act has also helped SBI. The Act allows lenders to attach assets of defaulting borrowers without having to go to court for the purpose. It paves the way for the setting up of asset reconstruction companies to recover non-performing assets. SBI has already spruced up its act in respect of recovery of bad loans and has moved to seize the assets of defaulting borrowers.
However, analysts said there were concerns that the bank may also make provisioning for the huge loans lent to the Dabhol Power project this quarter. SBI's total exposure to the project is around Rs 1,800 crore and there were rumours that the company may make a provisioning of 10% of the total amount, i.e. Rs 180 crore (Rs 1.8 billion).
The interest in the SBI scrip was also on hopes that the Centre may hike the cap on foreign institutional investors' holding in SBI from 20% to 49% or the government will exclude the Global Depository Receipts holding of 7.65% from the ceiling of 20% for FIIs. Currently, the limit for FIIs in SBI stands exhausted as they hold a 19.63% stake (as per the shareholding pattern of the bank on 31 December 2002).
For Q3 ended 31 December 2002, SBI recorded a 28% growth in net profit to Rs 787.05 crore (Rs 7.87 billion). Net revenues jumped by 18% to Rs 3,756.93 crore (Rs 37.56 billion).
BSE code: 500112
More Hot Pursuits
