SBI shares: IIFL sees strong upside on the bank stock
Premium- The brokerage house has reiterated its Buy rating on SBI shares with a target price of ₹620
State Bank of India (SBI) annual report is premised on the themes of better productivity, higher digital adoption and sustainable & inclusive growth, highlighted domestic brokerage and research firm IIFL.
Buoyed by a better overall environment, public lender SBI returned to double-digit loan growth after FY19, with around 10% of incremental growth in FY22 coming from the infrastructure sector.
“Corporate RoA (PBT) saw sharp expansion and the overall RoA improvement was driven by decadal-low credit costs. SBI is showing strong momentum across segments and stress loans are very well provided. ROA/ROE is likely to be healthy at 0.9/18% over FY23-25ii, mainly driven by lower operating expenses and some further moderation in credit costs," the note stated.
The brokerage house has reiterated its Buy rating on SBI shares with a target price of ₹620, implying a potential upside of more than 37% from current stock level.
India's biggest bank reported a 41% rise in standalone net profit at ₹9,113.5 crore for the quarter ended March 2022, its highest ever quarterly profit. The lender had reported a profit of ₹6,450.7 crore in the year-ago quarter.
SBI's net interest income (NII), the difference between interest earned and expended, saw an increase of 15% to ₹31,198 crore during Q4FY22 from ₹27,067 crore year-on-year (YoY). Domestic net interest margin (NIM) for Q4FY22 increased by 29 bps YoY at 3.40%.
The public lender's asset quality improved as gross non-performing assets (NPAs) were at 3.97% of the total assets, down from 4.50% while net NPA stood at 1.02% compared to 1.34% quarter-on-quarter (QoQ). The total provision for contingencies including those for bad loans stood at ₹7,237 crore compared to ₹6,974 crore from the previous quarter and ₹11,051 crore (YoY).
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.