Stock tracking analysts said the adjustment for recovery and upgrade, net slips were negative for the third consecutive quarter and said net interest margin (NIM) is likely to expand, as the bank has three-quarters of its debt book under floating rate.
Calling the stock ‘attractively valuable’ has their price target indicating a rise of up to 56 percent for the counter.
Debt growth has been positively surprised and this improvement will be the main catalyst for the stock, Nomura India said, with a target of Rs 615 per stock.
CLSA said SBI’s existing valuation was unexpected, adding that SBI was one of its top picks in the banking sector. Credit costs are set to fall as brokerage sets a target of Rs 660 on the stock.
PSU Bank jumped 41.27 per cent YoY to Rs 9,113.53 crore in the March quarter from a net profit of Rs 9,113.53 crore, up from Rs 6,450.75 crore in the year-ago period.
NIM was steadily stabilizing at 3.12 per cent.
Gross non-performing assets (NPAs) accounted for 3.97 per cent of total assets, down from 4.50 per cent and 4.98 per cent per annum, respectively.
Prabhudas Lillaladher said that like most of the large private peers, the recoveries have exceeded the slippage resulting in lower total NPAs. The balance sheet, it said, is stronger than ever with a high provision coverage ratio of 75 percent, minimum pressure and adequate coverage in the One-Time Restructuring (OTR) pool.
“Although credit growth was strong, credit flows were mainly driven by corporates due to good utilization levels. Credit could grow by 12 per cent in FY23, however, NIM will take a sharp look,” Prabhudas said while advising Liladh on the Rs 600 target.
SBI’s pre-provision operating profit was consistent with the estimate but profit was 6 per cent higher than the estimate led by the lower provision. Effectively, there was a trend in the quarterly expected line for SBI, with QoQ debt growth of 6 per cent, stable margins and continued improvement in asset quality, it said.
The brokerage found that the valuation FY24 is 0.9 times the price of the original book and is targeted at Rs 710 on the stock.
The stock traded 2.48 per cent higher at Rs 456.10. At this price, IIFL’s Rs.
665 eligible for SBI for Axis Securities.
It costs 673 rupees.
Nirmal Bang Institutional Equities said that the core operational metrics of the brokerage were strong, with overall debt books growing 11.6 per cent year-on-year and sequentially 6 per cent.
Both retail and corporate have seen healthier and more sustainable traction behind pick-ups in market demand, suggesting that pick-up growth levels in the wholesale segment are better from the point of view of growth.
“With 74 percent of loan books floating rate, we are seeing margins in a positive direction. Asset quality continues to improve, NPAs continue to decline and satisfactory performance on accounts coming out of suspension. Credit costs for FY22 stood at 94 bps and bank. We maintain our ROE estimate at 14.5-15% and reiterate SBI as one of our top picks, “he said while suggesting a target of Rs 626.
(Disclaimer: The recommendations, suggestions, opinions and opinions offered by the experts are their own. These do not represent the views of the Economic Times)