Buy SBI, target price Rs 300: Motilal Oswal

Motilal Oswal has given a buy rating to SBI with a target price of Rs 300. The share price moved down by 1.20 per cent from its previous close of Rs 234.20. The stock’s last traded price is Rs 231.40.

State Bank of India, incorporated in the year 1955, is a banking company (having a market cap of Rs 209014.40 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 current valuations are compelling with the core bank trading at 0.4x FY22E ABV (1.3x FY22E P/Core PPoP and 3.1x FY22E P/E). RoEs should recover to ~14% by FY23E. The brokerage expects rerating in the stock as long awaited earnings normalization cycle has begun.

Promoter/FII Holdings
Promoters held 34.7 per cent stake in the company as of Sept 30, 2020, while FIIs held 19.9 per cent, DIIs 25.1 per cent and public and others 20.4 per cent.