Sharekhan has given Buy recommendation for State Bank of India with a target price of Rs. 600 in its research report issued on May 13, 2022

Sharekhan’s research report on State Bank of India

SBI reported strong loan growth of 12% y-o-y/ 6% q-o-q above estimates (of 9% y-o-y) led by strong growth in mortgages (11.5% y-o-y) , wholesale book (11% y-o-y) and overseas book (15%). Core operating profits grew by 33%y-o-y/ 2% q-o-q mainly on account of higher net interest income and contained opex. Net interest income grew by 15% y-o-y / 2% q-o-q led by higher loan growth. NIMs remained stable q-o-q reported at 3.12%. Net interest income grew by 15% y-o-y / 2% q-o-q led by higher loan growth. NIMs remained stable q-o-q reported at 3.12%. Asset quality improved significantly with GNPA & NNPA ratios falling by 53 bps / 32 bps q-o-q to 3.97%/1.02%. PCR improved by 400 bps q-o-q to 75%.

Outlook

At CMP, SBI trades at 0.9x and 0.8x its FY2023E and FY2024 Core ABV. We maintain a Buy rating on the stock with a revised SOTP-based PT of Rs. 600. SBI remains our top pick among PSU baskets.

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