Sharekhan's research report on State Bank of India
State Bank of India (SBI) is attractive (strong asset quality, well capitalised, underwriting strength, etc.); going forward, we expect NII and profitability to reflate in the next 2-3 years, helped by better profitability. The stock trades at attractive 1.6x/1.3x its FY2022E/FY2023E ABVPS; with overhang of moratorium gone, paving way for NPA recognition and recovery, supportive regulatory stance, resumption of IBC, extension of the ECLGS scheme, and GDP growth recovery in FY2022E augur well for SBI’s growth. Asset quality is emerging from the shadows; we believe a strong balance sheet and market share gains can drive the re-rating of the stock; SBI’s variance with reported versus proforma GNPA is at par with better-rated private banks.
Outlook
We maintain Buy on the stock with an unchanged SOTP-based price target (PT) of Rs. 460.
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