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SBI share rises over 6% post Q2 earnings; time to buy, sell or hold the stock?

Share price of SBI climbed 6.76% to Rs 220.95 against previous close of Rs 207 on BSE

twitter-logoBusinessToday.In | November 5, 2020 | Updated 10:41 IST
SBI share rises most on Sensex, Nifty post Q2 earnings
SBI share is trading higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages

SBI share rallied over 6% in early trade today after the lender reported a 52 per cent rise in net profit in Q2. Share price of SBI climbed 6.76% to Rs 220.95 against previous close of Rs 207 on BSE. SBI share is trading higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

The stock opened with a gain of 3.6% at Rs 214 today. The banking share was the top gainer on Sensex and Nifty today. On Nifty, the stock rose 6.76% to Rs 221 against previous close of Rs 207.

Total 52.05 lakh shares changed hands amounting to turnover of Rs 115.61 crore. Market cap of the lender rose to Rs 1.96 lakh crore. The stock has gained 13.61% in the last 5 days.However, the share has lost 34.54% since the beginning of this year and fallen 31.56% in one year.

SBI sits on a Rs 60,000 crore NPA time bomb

Net profit rose to Rs 4,574.16 crore for the July-September quarter of fiscal year 2020-21 as against Rs 3,011.73 crore in the corresponding period of last year. However, total income fell to Rs 75,341.80 crore in Q2 as against Rs 75,850.78 crore in the same period of FY20.

Net interest income (NII) - the difference between interest earned and interest expended - increased 5.9 per cent to Rs 28,182 crore as against Rs 24,600 crore in Q2FY20.

Net NPAs were reported at Rs 36,451 crore in last quarter compared to Rs 42,704 crore in Q2FY20.

SBI Q2 results: Net profits rises 52% to Rs 4,574 crore, NII up 6%

Gross NPAs fell to Rs 1.25 lakh crore as against Rs 1.29 lakh crore in the second quarter of last year.

Edelweiss maintained a buy call on the stock and gave a price target of Rs 300 for 12 months. It said, "SBI is tempting at current price,but we face up to the reality of avoiding PSBs as a corollary  of  risk-off  and  possibility  of  social  programme  costs.  Hence,  we do not feature it among our top picks. An investor with constructive views on social program risks may be more sanguine about the opportunity here."

Motilal Oswal gave price target of Rs 300 after SBI's Q2 earnings.

"We sharply upgrade our earnings estimate for FY21/FY22 by 45%/24% as we factor in higher NII growth and moderation in credit cost. We thus project RoA/RoE of 0.7%/12.4% by FY22. The core bank trades at a cheap valuation of 1x FY22E core PPoP and 2.3x FY22E P/E. Reiterate BUY, with TP of INR300 (0.7x Sep '22e ABV)," the brokerage said.

CLSA raised its target price to Rs 330 from Rs 310 and said Q2 was reassuring with NII/core ppop growth of 15% yoy. Commentary on asset quality was strong, the brokerage said while increasing FY21/22/23 earnings estimates by 64/17/12%.

Edelweiss maintained a buy call on the stock and gave a price target of Rs 300 for 12 months. It said, "SBI is tempting at current price,but we face up to the reality of avoiding PSBs as a corollary  of  risk-off  and  possibility  of  social  programme  costs.  Hence,  we donot feature it among our top picks. An investor with constructive views on social program risks may be more sanguine about the opportunity here."

Motilal Oswal gave price target of Rs 300 after SBI's  Q2 earnings.

"We sharply upgrade our earnings estimate for FY21/FY22 by 45%/24% as we factor in higher NII growth and moderation in credit cost. We thus project RoA/RoE of 0.7%/12.4% by FY22. The core bank trades at a cheap valuation of 1x FY22E core PPoP and 2.3x FY22E P/E. Reiterate BUY, with TP of INR300 (0.7x Sep '22e ABV)," the brokerage said.

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