Goldman Sachs downgrades SBI to 'sell'

Goldman Sachs has downgraded State Bank of India (SBI) to 'sell' from 'neutral'. It has also cut its target price to Rs 1,900 from Rs 2,420, citing concerns over the lender's stress levels and the company's desire to grow its loanbook. Goldman says SBI could post a 'tough' year in 2014 financial year given expectations the lender will continue to face margin pressure over its 'aggressive' lending strategy. Goldman further expects stress loan formation to remain elevated, especially if the economy weakens, while it sees SBI's operating expenses increasing due to provisions for pensions. Last week, SBI posted its first quarterly net profit drop in two years. The share price of SBI gained 0.49 per cent on the Bombay Stock Exchange on Monday to close at Rs 2,161. 161. It hit a low of Rs 2,146.45 and a high of Rs 2,182.15.