Arihant Capital has given Buy recommendation for State Bank of India with a target price of Rs. 660 in its research report issued on May 16, 2022

Arihant Capital’s research report on State Bank of India

State Bank of India (SBI) reported mixed performance during Q4FY22 with profit growth of 41% YoY to INR 9,114 cr was lower than our estimate of INR 10,152 cr, driven by 35% YoY decline in provisions. Operating profit growth was lower at 6.5% YoY to INR 19,717 cr was 7% below than our estimate, impacted due to high overhead cost and investment depreciation. NII for the quarter increased by 15% YoY/2% QoQ to INR 31,198 cr as against our expectations of INR 31,061 cr. NIM was flat QoQ at 3.4% as yield on advances sustained at 7.6% and cost of deposits was flat QoQ at 3.83%. Slippages ratio was curtailed at ~0.4% QoQ and GNPA improved by 53bps QoQ at 3.97% led by strong recoveries and upgrades. Overall, credit cost for Q4FY22 stood at 0.49% with rise in provisioning coverage to 75% (from 71% QoQ). On the business front, advances growth has gathered pace in Q4FY22 and recorded 11.6% YoY/6% QoQ growth led by 11% QoQ uptick in corporate segment.

Outlook

We maintain our Buy rating on the stock with a revised target price of INR 660, based on SOTP valuation.

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