Buy State Bank of India, target price Rs 300: Motilal Oswal

Motilal Oswal has given a buy rating to State Bank of India with a target price of Rs 300. The share price moved up by 5.34 per cent from its previous close of Rs 207.05. The stock’s last traded price is Rs 218.10.

State Bank of India, incorporated in the year 1955, is a banking company (having a market cap of Rs 194199.55 Crore).

Financials
For the quarter ended 30-09-2020, the company reported a Consolidated Interest Income of Rs 44688.82 Crore, down 2.24 % from last quarter Interest Income of Rs 45711.40 Crore and down 4.05 % from last year same quarter Interest Income of Rs 46575.64 Crore. The bank reported net profit after tax of Rs 5403.81 Crore in latest quarter.

Investment Rationale
The brokerage believes the earnings normalization cycle for SBIN has begun as the uncertainty brought about by the pandemic is receding significantly. It sharply raises FY21/FY22 estimates by 45%/24%, led by healthy NII and moderation in credit cost. The core bank is trading at a cheap valuation of 1x FY22E core PPoP and 2.3x FY22E P/E.

Promoter/FII Holdings
Promoters held 56.9 per cent stake in the company as of Sept 30, 2020, while FIIs held 8.9 per cent, DIIs 25.2 per cent and public and others 9 per cent.