Relief to SBI on the cards; investors should await clarity on asset quality

Relaxation in the two segments is positive of asset quality recovery, but investors should await clarity from post-results commentary

State Bank of India’s (SBI’s) size, as well as diversity of exposure, hasn’t been of much help to investors during the slump. This reflects in the near-50 per cent fall in market cap over the past three months.

The Street, too, has been fast to de-rate the stock, with stress building in the 18.5-per-cent exposure to the two troubled pockets (MSMEs and NBFCs).

With Wednesday’s rescue measures, however, the recovery in asset quality for SBI may not come to a jolting halt. While NBFCs may gain from the liquidity measures — which would help them meet repayment obligations due in the