Sharekhan's research report on State Bank of India
SBI expects to sustain healthy earnings growth going ahead and further improve its return ratios led by improved loan growth outlook, steady asset quality performance and in turn lower credit cost. The bank has guided to keep credit cost well below ~1%. The bank indicated that the wholesale corporate loan book is also showing uptick in demand. Focus is to maintain strong underwriting especially in this portfolio as loss given default probability is higher. Management also indicated that current capital levels and expected internal accruals are sufficient for growth in the near term. A higher mix of floating loans, improving credit-deposit (CD) ratio and a higher CASA ratio will support margins in a rising interest rate environment. SBI has recently increased retail term deposit rates marginally in the 1-2 year tenors but majority of higher rates have been passed on bulk deposits. At CMP, SBI trades at 1.0x and 0.9x its FY2023E/24E Core ABV.
Outlook
We retain our Buy rating on SBI with an unchanged PT of Rs. 600. It is our top pick among PSU banks as we believe it is the best play on a gradual recovery in the Indian economy, with balance sheet strength and improved core operating metrics.
More Info
At 16:01 hrs State Bank of India was quoting at Rs 464.35, up Rs 3.15, or 0.68 percent.
It has touched an intraday high of Rs 465.00 and an intraday low of Rs 458.00.
It was trading with volumes of 854,729 shares, compared to its thirty day average of shares, a decrease of percent.
In the previous trading session, the share closed up 1.51 percent or Rs 6.85 at Rs 461.20.
The share touched its 52-week high Rs 549.05 and 52-week low Rs 401.30 on 07 February, 2022 and 23 August, 2021, respectively.
Currently, it is trading 15.43 percent below its 52-week high and 15.71 percent above its 52-week low.
Market capitalisation stands at Rs 414,414.34 crore.
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