SBI shares cross Rs 7 lakh crore mcap, hit record high: Price targets, valuation, technicals and more

Shares of State Bank of India (SBI) hit their record high in early deals today with SBI market cap crossing the Rs 7 lakh crore mark today. SBI stock gained 0.79% intraday to a high of Rs 790.15 on the BSE. Market cap of the bank climbed to Rs 7,00,760 crore. Total 3.20 lakh shares changed hands amounting to a turnover of Rs 25.01 crore on BSE.  As the SBI stock hit record high, the scrip is trading in the overbought zone, signals its relative strength index (RSI) which is at 72.9. SBI stock has a one-year beta of 0.7, indicating very low volatility during the period. SBI shares are trading higher than the 5 day, 10 day, 20 day, 50 day, 100 day and 200 day moving averages.           

The stock has risen 22% in 2024 and gained 39.47% in a year.

Brokerage Sharekhan has target price of Rs 915 on the banking stock.

"The bank has an additional non-NPA provisions of 1% of loans outside the provision coverage ratio to take care of any uncertain future events, which is a key positive. We maintain a Buy rating on SBI with a revised price target (PT) of Rs 915," said Sharekhan.

Incred Equities has a target  price of Rs 850 in a bull case scenario for SBI. It has an add rating for the lender.

The brokerage cited strong asset quality in personal loans and other retail loans, despite the headwinds in small-ticket unsecured personal loans and improved confidence on asset quality among key factors behind the bullish stance.

Bull-case valuation

Assuming a 10% beat to our estimates and a higher multiple of 1.4x, the target price can be Rs.850.

Bear-case valuation

Assuming a 10% miss to our estimates and a lower multiple of ~1.x, the target price can be Rs 650em

The lender has a high price to book ratio of 2.12. The ratio is high compared to peers such as Bank of Baroda (1.38), PNB (1.50) and Union Bank (1.61).

The state-owned lender also has a low PEG ratio of 0.3. A stock having PEG less than 1 is considered undervalued and with PEG ratio above 1 is regarded as an overvalued one. 

The bank had a Capital Adequacy Ratio (CAR) of 14.68% as of December 2023 quarter. Public sector banks are required to maintain a CAR of minimum 12% in India.

Motilal Oswal maintained its buy call on the SBI stock with a target of Rs 860.

“We estimate a 22% CAGR in earnings over FY24-26 after a blip in 2HFY24, resulting in FY26E RoA/RoE of 1.2%/19.1%. SBI remains one of our preferred ideas in the sector and we reiterate our BUY rating with a target price of Rs 860. SBI is well positioned to deliver 13-14% loan growth over FY23-26E, aided by an improved disbursement rate for sanctioned loans and a recovery in corporate demand,” said Motilal Oswal.

The lender reported a 35% fall in Q3 net profit to Rs 9,163 crore against Rs 14,205 crore in the year-ago period. Net interest income (NII) of the country's largest bank stood at Rs 39,815 crore, missing estimates of Rs 40,304 crore.

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