Analysts tracking the stock said, adjusted for recovery and upgrades, net slippages were negative for the third straight quarter and said an expansion in net interest margin (NIM) is likely ahead, given the bank has three-fourth of its loan book under floating rate.
Calling the stock ‘attractively valued’ they have price targets that hint at up to 56 per cent upside for the counter.
Loan growth surprised positively and this improvement will be the key catalyst for the stock, said Nomura India, which has a target of Rs 615 on the stock.
CLSA said the prevailing SBI valuations are undemanding, adding that SBI remains one of its top picks in the banking sector. Credit cost continues to undershoot it said, as the brokerage set a target of Rs 660 on the stock.
The PSU bank reported a 41.27 per cent YoY jump in standalone net profit at Rs 9,113.53 crore for March quarter, up from Rs 6,450.75 crore in the year ago quarter.
NIM was stable sequentially at 3.12 per cent.
Gross non-performing assets (NPAs) were at 3.97 per cent of the total assets, down from 4.50 sequentially and 4.98 per cent year-on-year.
Prabhudas Lillaldher said, like most large private peers, recoveries exceeded slippages leading to lower gross NPAs. Balance sheet, it said, is stronger than ever with a high provision coverage ratio at 75 per cent, minimal stress and adequate coverage on one-time restructuring (OTR) pool.
“While loan growth was stronger, credit flow was largely led by corporate due to better utilisation levels. Credit is guided to grow by 12 per cent YoY in FY23 although, NIM would keenly watch,” Prabhudas Lilladher said while suggesting a target of Rs 600.
said SBI’s pre-provision operating profit was in line with estimates but profit was 6 per cent above estimates led by lower provisions. Operationally, the quarter for SBI trended largely on expected lines, with 6 per cent QoQ loan growth, stable margins and continued improvement in asset quality, it said.
The brokerage finds valuations are attractive at 0.9 times FY24 core book value and has a target of Rs 710 on the stock.
The stock traded 2.48 per cent higher at Rs 456.10. At this price, a IIFLs Rs 710 target suggests a potential 56 per cent upside while PL’s Rs 600 target suggests a potential 31 per cent upside.
For Axis Securities, SBI is Rs 665 worthy.
finds it worth Rs 673.
Nirmal Bang Institutional Equities said the brokerage’s key operational metrics were strong, with overall loan book growing 11.6 per cent YoY and 6 per cent sequentially.
Retail and corporate both saw healthy and sustainable traction on the back of pick-up in market demand, it said, adding that pick-up in the utilisation levels in the wholesale segment augurs well from the growth standpoint.
“With 74 per cent of the loan book on floating rate, we see margins on a positive trajectory going forward. Asset quality continued to improve, with NPAs declining sequentially and satisfactory performance on accounts coming out of moratorium. Credit cost for FY22 stood at 94 bps and the bank would like to contain it within 100 bps going forward. We maintain our ROE estimate of 14.5-15 per cent and reiterate SBI as one of our top picks,” it said while suggesting a target of Rs 626.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
