Sharekhan has given Buy recommendation for State Bank of India with a target price of Rs. 650 in its research report issued on Dec 22, 2021
Sharekhan’s research report on State Bank of India
State Bank of India (SBI) offers a good investment opportunity as the stock has corrected by 16% from its peak. With a strong retail franchise and recovery in the asset quality, particularly the corporate book, we believe the bank is well positioned than its peers to deliver strong advances and PAT growth. We believe the bank is better placed in terms of loan underwriting practices as compared to its PSU peers, which has helped the bank to maintain its asset quality at ~5% in the past six quarters. The company’s GNPA and NNPA ratio improved by 42 bps and 25 bps q-o-q to 4.9% and 1.5%, respectively, in Q2FY2022. SBI is well capitalised with a capital adequacy at 13.35% as of September 2021 and is expected to reap the benefit of pickup of the system’s credit growth being a dominant PSU player, which is likely to be a trigger for its performance going ahead.
Hence, we reiterate our Buy rating on SBI with a revised SOTP-based PT of Rs. 650. At the CMP, SBI trades at 1.5x its FY2023E P/BV.