Goldman Sachs downgrades SBI shares to ‘sell’

Goldman Sachs downgrades State Bank of India (SBI) to “sell” from “neutral” and cut its target price to 1,900 rupees from 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 fiscal 2014 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.

* SBI’s shares were up 0.4 percent as of 0739 GMT.