Prabhudas Lilladher has given Buy recommendation for State Bank of India with a target price of Rs. 650 in its research report issued on Oct 04, 2022
Prabhudas Lilladher’s research report on State Bank of India
We recently interacted with the management to understand 1) credit outlook, 2) changes in credit appraisal 3) asset quality view and 4) opex trajectory. The bank is optimistic on loan growth, as improving economic activity and tight liquidity may support its credit offtake. New proposals and unavailed limits within corporate total to Rs6trn, while retail momentum might continue. With cash flows normalizing for SMEs, the ECLGS/OTR pools are also performing well. Underwriting has strengthened with induction of non-sales personnel in credit appraisal and robust credit research across 36 sectors. Asset quality may remain under control and target is to keep credit costs below 1%. While we slightly tweak our estimates, we expect a core PAT CAGR of 20% over FY22-25E.
Retaining the multiple at 1.4x, we roll forward to core Sep’24 ABV, raising SOTP based TP from Rs620 to Rs650. Maintain ‘BUY’.