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SBI share price climbs over 5% as brokerages raise target price above Rs 200

Share price of SBI opened with a gain of 5.27% to Rs 197.70 compared to the previous close of Rs 187.80 on BSE

twitter-logoBusinessToday.In | June 8, 2020 | Updated 15:57 IST
SBI share price climbs over 5% as brokerages raise target price above Rs 200
SBI stock has lost 44.58% in last one year and fallen 43.26% since the beginning of this year.

SBI share price was among the top Sensex and Nifty gainers today after brokerages turned upbeat on the prospects of the stock post Q4 earnings. Share price of SBI opened with a gain of 5.27% to Rs 197.70 compared to the previous close of Rs 187.80 on BSE.

SBI share hit intra day high of Rs 189.8, a rise of 9.05% on Friday after the lender reported strong Q4 earnings. SBI stock ended 7.90% or Rs 13 to Rs 187.80 compared to the previous close of Rs 174.05 on BSE.

The stock extended gains in trade today and is trading higher than 5 day, 20 day and 50 day moving averages but lower than 100 day and 200 day moving averages.

However, SBI stock has lost 44.58% in last one year and fallen 43.26% since the beginning of this year. In one week, the stock has gained 11.35%. SBI stock has a outperform rating as on June 8, 2020. Of 46 analysts covering the stock, 40 have buy or outperform rating,  four recommend hold, one underperform and one sell, according to  Reuters.

Market cap of the lender rose to Rs 1.69 lakh crore on BSE. 

SBI share price climbs 9% post four-fold rise in Q4 net profit

The large cap stock hit its 52 week high of Rs 373.70 on July 8, 2019 and 52 week low of Rs 149.55 on May 22 , 2020.

After the lender announced its Q4 earnings, brokerages were enthused about the prospects of the stock and lender. Motilal Oswal gave a buy call to the stock with target price of  Rs 280 compared to the market price of Rs 188.

"SBI reported a modest quarter with weak NII growth (affected by higher interest reversals on agri slippages), although stake sale gains from its cards subsidiary supported earnings. Slippages were at a four-quarter low, supported by the RBI dispensation, resulting in improved asset quality. The moratorium book at 23% of total loans surprised positively. We cut our estimates for FY21/FY22 by 17%/16% as we build-in a slight moderation in margins / fee income and higher credit cost," said Motilal Oswal in an earnings note.

21.8% of SBI customers avail moratorium facility on loan EMIs

SBI reported over four-fold jump in standalone net profit for Q4. SBI reported standalone net profit of Rs 3,580.81 crore for March quarter 2019-20 against profit of Rs 838.4 crore during January-March period of 2018-19. Net income during March quarter rose to Rs 76,027.51 crore from Rs 75,670.5 crore in the same period of 2018-19.

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Edelweiss Research in a note said, "SBI's operating profit was soft on lower NIMs (interest income reversals) and higher opex (wage impact). Armed with a strong franchise, not to mention slackened competition, the bank aims to build up the business. We believe improving growth with steady/improving NIM will aid revenue traction. While SBI is tempting at current price, we face up to the reality of avoiding PSBs as a corollary of risk-off and possibility of social programme cost. Hence, we will not feature it among our top picks. We maintain 'BUY/SO'. It gave a target price of  Rs 188 for the stock.

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Credit Suisse said Q4 was a positive surprise on asset quality and loans under moratorium. Given increased focus on top-rated corporate, reduced share of SME book (from 15 to 11% in 3Y), and largely salaried exposures in retail book, asset quality vulnerabilities are lower compared with other PSUs.  The brokerage gave a target price of Rs 230 on the bank.

HSBC gave a buy call with a target price of Rs 285 for the stock and said NPAs continue downwards journey even as bank navigates COVID-19 challenges. Share of loans under moratorium are not alarming yet. Provisioning, liquidity and capital buffers appear adequate.

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