Motilal Oswal has given Buy recommendation for State Bank of India recommended buy rating on the stock with a target price of Rs 675 in its research rep with a target price of Rs. 675 in its research report issued on Nov 03, 2021
Motilal Oswal’s research report on State Bank of India
SBIN reported a steady quarter, with net earnings growing 67% YoY to INR76.3b (15% beat), aided by controlled provisions, as asset quality showed remarkable strength, despite the impact of the second COVID wave. It created a family pension provision of INR74.2b, instead of amortizing it over five years, thus prudently deploying one-off gains from the DHFL recovery and tax refund. The bank has fully provided for its exposure towards the SREI group. GNPA/NNPA ratios improved by 42bp/25bp QoQ to 4.9%/1.5% as fresh slippage subsided to INR41.8b (66bp annualized). Restructured book remained in check at 1.2% of loans, while the SMA pool declined sharply to INR66.9b (27bp of loans).
We expect SBIN to deliver FY23E/FY24E RoE of 14.5%/15.7%, even as we build in a credit cost of 1.1%/1%. We maintain our Buy rating, with a revised TP of INR675 (1.4x Sep’23E ABV + INR210 from subsidiaries).