KR Choksey has given Buy recommendation for State Bank of India with a target price of Rs. 532 in its research report issued on Aug 06, 2021
KR Choksey’s research report on State Bank of India
In Q1FY22, Net Interest Income increased by 3.74% YoY at INR 27,638 Cr. Domestic NIM for Q1FY22 at 3.15%, has declined by 9 bps YoY. Operating Profit increased by 5.06% YoY to INR 18,975 Cr in Q1FY22 from INR 18,061 Cr in Q1FY21. The operating profit excluding exceptional item increased by 14.85% YoY . Non-Interest Income for Q1FY22 at INR 11,803 Cr grew by 24.28% YoY. Net Profit of INR 6,504 Cr in Q1FY22. This represents increase of 55.25% YoY. Deposits grew at 8.82% YoY at INR 37,20,987 Cr. Credit Growth stood at 5.64% YoY at INR 25,23,793 Cr in Q1FY22. Net NPA ratio at 1.77% is down 9 bps YoY. Gross NPA ratio at 5.32% is down 12 bps YoY in Q1FY22. Capital Adequacy Ratio (CAR) has improved by 26 bps YoY to 13.66% as of June 2021.
We value the bank at 1.4x FY23E P/ABV (earlier 1.2x) on an ABV of INR 325, taking the SOTP value to INR 532 per share (earlier INR 450 per share), implying a potential upside of 20.4% over the CMP. Accordingly, we upgrade the rating on the shares of SBI Ltd. to a “BUY”.