The purchase, analysts say, could boost the stock price by 35%. Check target price

Shares of State Bank of India (SBI) are down 5% this year. The shares are outperforming the Nifty 50 index, which has fallen 10% year to date.

Shares of State Bank of India (SBI) are down 5% this year. The shares are outperforming the Nifty 50 index, which has fallen 10% year to date. Despite the recent correction in SBI shares due to high market volatility, analysts at Motilal Oswal remain bullish on the stock. The securities firm saw SBI shares rise 35% and reiterated its buy recommendation on the stock. SBI shares are trading on the National Stock Exchange (NSE) at Rs 445 intraday, down 0.2%.

Strong balance sheet, positive loan growth momentum

The State Bank of India has strengthened its balance sheet by increasing reserves in troubled accounts. The PCR ratio increased from around 65% in the first quarter of 2018 to around 90% in the fourth quarter of 2022, widening the range of companies’ NPAs. According to analysts Motilal Oswal, this is a balance sheet review and is currently focused on growth. “That’s why we expect loan growth to improve and CAGR of 12% over 22-24 years,” they say.

Well placed to support margins in a rising interest rates scenario

 The analytics highlighted that SBI has one of the best liability Franchise (CASA portfolio: ~45%). This, combined with a high MCLR/floating rate/EBLR ratio (75% of total loans), provided margin support even as interest rates rose. Furthermore, PFI subsidiaries such as SBI MF, SBILIFE, SBICARD, and SBI Cap have performed well in recent years, maintaining the securities house’s SoTP value for banks. The value of SBI’s MF liberalization in FY23 is probably going to help SOTP even more, the author predicted.

Improved asset Quality, a decline in NPAs

Motilal Oswal analysts report significant improvement in SBI’s asset quality and domestic gross retail sales holding steady at around 0.74%. In general, new products account for around 1% of loans, a figure lower than that of private companies. This, combined with improved/improved health, reduced the GNPA/NNPA ratio to 1.4%, respectively. “The decline will be controlled, and over the next 22 to 24 years, we anticipate that the cost of credit will decline at a rate of no more than 0.9 percent, if not less. The debt bond is the best recovery option for improving the underlying profitability of the company.

Stock Price: Buy

Target price: 600 rupees; Upside: 35%

SBI delivered strong results in FY22 through stable business, revenue growth, and supply chain management. The bank’s management expects growth to remain strong and retail sales to increase as occupancy increases. A high percentage of variable loans to CASA supports margins against rising interest rates. Analysts said asset quality was good, the outlook was favorable, the restructured discount rate fell to 1.1% and SMA Group credit fell 13 basis points.

Borrowing costs are expected to reach a CAGR of 28% in 2022-24 and decline to 0.9% in 2022-24. SBI remains the biggest buy in the Motilal Oswal sector with a target of Rs 600.

SBI shares fall more than 5% in the first quarter

The company’s shares lost their morning gains, dropping 4.85% to Rs 301.10 on BSE.

SBI shares fell more than 5% today after the lender reported a heavy loss of Rs 4,876 crore in the June quarter.

The company’s shares lost their morning gains, dropping 4.85% to Rs 301.10 on BSE.

The company’s shares fell 5.32% to Rs 300.50 on the NSE.

SBI, the country’s largest bank, today reported a heavy loss of Rs 487.6 billion in the June quarter due to an increase in NPLs.

The bank posted a net profit of Rs 2,060 crore for the April to June period of the previous financial year, SBI said in a statement.

Banks’ gross non-performing assets (NPA) rose to 10.69% of total reserves at the end of June compared to 9.97% last year.

However, net NPL slightly decreased from the previous 5.97% to 5.29%.

As a result, the total NPA increased from Rs 1,880.68 crore at the end of the same month last year to Rs 212.84 crore in June 2018.

Buy State Bank of India at a price target of Rs 673:

The State Bank of India was incorporated in 1955 as a banking corporation (market capitalization of Rs 4,121,3856 crore).

Indian State Bank’s Income/Basic Income segment includes interest and discounts on prepayments and promissory notes for the first financial year ended March 31, 2021, investment income, interest, and interest on RBI and other interbank funds balances. It is possible.

For the quarter ended 31 March 2022, the Company reported total consolidated sales of Rs 10,03468 crore, an increase of 3.35% from the total sales of Rs 10,452.82 crore in the previous quarter and an increase of 4.45% over the previous quarter. Total sales of 3.434 billion won. For the same period of the previous year, the bank reported a net income after tax of 9,549.13 million in the last quarter.

Investment Reasonable

SBI closes FY22 with an RoE of 13.9% and an RoA of 0.67%, supported by cumulative growth, NGPA falling below 1% to its lowest 10-year level, cost of credit at 55 basis points, and margins with a stable profile. . New normal borrowing costs of 1%, loan growth of 13%/15% (FY23/24H), asset sales and stable net interest margin, asset quality improvement of more than 16% during FY23/24H at a valuation of 1.5 x 23 The pound continued to buy in September and the target price remained unchanged at 673 rupees.

By bemaad

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