SBI merger: Look beyond the numbers

Merger of SBI and its associates is viewed as a step towards cleansing the banking system

Ever since talks of the merger of State Bank of India (SBI) and its associates began in mid-2016, analysts have expressed concerns over how the merger could dent the earnings and profitability of SBI in the near to medium term. Now with the merger closer to fruition, the Street is somewhat divided on whether an investor should take a fresh exposure to the SBI stock now. The process of rationalising operations and realigning employees is seen as long-drawn, having an unavoidable negative impact on profitability in FY18. “Until I see the base resetting, which could take 12-18 months, I would