SBI Share plunged almost 4% even after Morgan Stanley raised the target price:
SBI: It is an Indian multinational public sector banking (PSB) in India located in Mumbai. It provides services in banking and other financials across India. The bank engaged in retail banking, corporate banking, investment banking, credit cards, mortgage loans, and insurance across the country. Initially, the Bank of Madras merged with the Bank of Calcutta and the Bank of Bombay to form the Imperial Bank of India in 1921. Later it was changed to State Bank of India in 1955. The present chairman of the bank is Dinesh Kumar Khara.
Meanwhile, the shares of the bank plunged almost 4% in the stock market. But, the global research firm Morgan Stanley raised its target price to Rs. 600 from Rs. 525 earlier. The firm also mentioned the improvements in the retail business and turnarounds of the bank. While the new target is almost 45% upside in the current share price.
Besides, the bank built a strong retail franchise and maintained deposits. Even in the process of digitization, the bank’s progress has surprised us, while comparing to other State-owned banks. We expect strong earnings results and significant re-rating to the bank in coming quarters, said Morgan Stanley in a statement.
It reminds us, China Merchants Bank (CMB) shows a consistent improvement in the retail franchise compared to other public sector banks. Although there are so many differences between CMB and SBI, we believe that SBI could show similar growth in the coming quarter, it added.
Moreover, the bank gained almost 120% from its low on March 24th, 2020. However, this situation reminds us of the early 2000s, where State-owned Enterprises (SoE) outperformed well in the initial years. In that SBI plays a key role.
Brokerages:
After the Q3 results, the brokerages raised their targets of the bank. The brokerages raise the target of the stock by 25-70% after its December quarter results beat the estimates.
Motilal Oswal raised our target to Rs. 475 per share. The Credit Suisse research firm raised the target by almost 70.40% to Rs. 460 against Rs. 270 earlier. Whereas Morgan Stanley raised their stakes by almost 50% to Rs. 525 per share from Rs. 350 earlier and now they increase the target to Rs. 600 per share. While the CLSA research firm hiked its target by 45.45% to Rs. 560 per share.
Moreover, the Macquarie research firm quoted that “The elephant has started dancing” after the results. We are confident about the balance sheet and asset quality of the bank. However, the legal asset of the bank is almost 68% of the coverage ratio on pro forma NPLs excluding write-offs. We believe that SBI is on right track to reach 1% ROA as credit costs normalize. Hence, we raise the targets of the bank to Rs. 450 per share from Rs. 360 per share earlier.
However, the shares of the State Bank of India (SBI) reported a bearish trend in the stock market on Friday. It lost 14.60 points with a 3.52% increase and reached 400.60 INR. While in BSE, the bank lost 15.65 points with a 3.77% decrease and reached 399.35 INR.
Stock Market on February 19th:
On Friday, both Sensex and Nifty continue their bearish trend in the stock market from the last three sessions of the market. The Sensex is trading below 50,900 levels and nifty trading below 15,000 levels in the stock market. The Sensex lost 434.93 points with a 0.85% decrease and reached 50,889.76 levels. While the nifty lost 137.20 points with a 0.91% decrease and reached 14,981.75 levels.
On the other side, the number of coronavirus cases in India on Friday, February 19th reached 1,09,63,394 with almost 1,56,111 deaths.
In the border markets, the S&P BSE SmallCap index reported a bearish trend in the stock market on Friday. It lost 153.02 points with a 0.76% decrease and reached 19,863.41 levels. But, the S&P BSE MidCap lost 340.12 points with a 1.67% decrease and reached a 20,035.52 level. While the Nifty Bank lost 745.40 points with a 2.04% decrease and reached 35,841.60 level.
Top Gainers on February 19th: UPL, IndusInd Bank, GAIL India, HUL, and Dr. Reddy’s Laboratories are the top gainers in today’s stock market.
Top Losers on February 19th: ONGC, Tata Steel, SBI, and Hero Motocorp, and Tata Motors are the top losers in today’s stock market.