Prabhudas Lilladher has given Buy recommendation for State Bank of India with a target price of Rs. 600 in its research report issued on May 14, 2022
Prabhudas Lilladher’s research report on State Bank of India
SBI surpassed expectations with earnings at Rs91.1bn (PLe Rs71.3bn) mainly driven by stronger PPoP that was a function of healthier NII and better other income (AUCA recoveries and forex income). Opex was controlled with asset quality improving further. Like most large private peers, recoveries exceeded slippages leading to lower GNPA/NNPA. Balance sheet is stronger than ever with a high PCR at 75%, minimal stress and adequate coverage on OTR pool. While loan growth was stronger, credit flow was largely led by corporate due to better utilization levels. Credit is guided to grow by 12% YoY in FY23E although, NIM would keenly watched.
We raise FY23/24E by an average ~6%. ROE could scale up to 15% in FY24E and SBI warrants a 1.4x multiple on core ABV. Retain BUY with SOTP based TP of Rs600.