Motilal Oswal's research report on State Bank of India
State Bank of India (SBIN) delivered a robust quarter with PAT up 74% YoY to INR132.6b (MOSLe: INR102.5b) fueled by lower provisions. PPoP growth was healthy at ~17% YoY with margin expanding ~30bp QoQ. The bank reported treasury gains of INR4.6b v/s loss of INR65.5b in 1QFY23. Fresh slippages moderated to INR24b, which coupled with healthy recoveries/upgrades resulted in GNPA/NNPA ratio improving 39bp/20bp QoQ to 3.5%/0.8% in 2QFY23, respectively. Restructured book too declined to 0.9% during the quarter. We raise our FY23E/24E EPS by 14%/6% to factor in higher NII and lower provisions even as we model higher employee expenses due to wage revisions. We thus forecast SBIN to report strong earnings progression at 32% CAGR over FY22-24. We estimate an RoA/RoE of 1.0%/17.3% in FY24.
Outlook
We revise our TP to INR700 (based on 1.4x FY24E ABV + INR192 from subsidiaries). SBIN remains one of our preferred picks in the sector.
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