(Rating: BUY, TP: Rs440, Upside 23.9%)
Strong indications of improved asset quality outcomes driving profitability normalization
- With capital and credit scenario no more a constraint, SBI's loan growth is expected to move past 10-12% over the medium term supported by increasing lending opportunities.
- Firm NIMs, revival in fee growth and recoveries, restrained increase in employee cost (provisions of wage revision behind) and normalization of credit cost should drive a smart RoA/RoE recovery in FY22/23.
- The stand-alone bank trades at an undemanding valuation of 0.6x P/ABV and 4x P/E on FY23 estimates. Rate the stock as BUY with a 12m PT of Rs440 (contribution of holdings in subsidiaries/associates at Rs174/share).
Shares of STATE BANK OF INDIA was last trading in BSE at Rs.393.05 as compared to the previous close of Rs. 355.1. The total number of shares traded during the day was 10611010 in over 97876 trades.
The stock hit an intraday high of Rs. 408.35 and intraday low of 385.2. The net turnover during the day was Rs. 4226621612.