SBI shares in focus ahead of board meeting to raise funds

State Bank of India (SBI) is likely to be under the spotlight during the trading session Tuesday ahead of its board meeting. The executive committee of the central board of the country's largest state-run lender is scheduled to meet to consider fundraising plans.

The executive committee of the central board is scheduled to have a meeting on April 18 2023 to consider the long-term fundraising plans of up to $2 billion, SBI said in a regulatory filing.

The board will examine the status and decide on long-term fundraising in single or multiple tranches of up to $2 billion under Reg-S/144A, through a public offer and/or private placement of senior unsecured notes in US Dollar or any other convertible foreign currency during the Financial Year 2023-24, the regulatory filing added.

Shares of State Bank of India rose more than 2 per cent to Rs 544 on Monday and India's largest PSU bank was commanding a market capitalization of little more than 4.85 lakh crore.

Sharekhan by BNP Paribas expects SBI to report a net interest income (NIIs) at Rs 39,657 crore in the March 2023 quarter, rising 27.1 per cent year-on-year (YoY) and 4.2 per cent quarter-on-quarter (QoQ). It sees the lender reported a net profit of Rs 15,135 crore, rising 66.1 per cent YoY and 7.2 per cent QoQ.

Advances are likely to grow at 16 per cent YoY, while margins to improve sequentially. Asset quality to remain stable and slippages would be largely from SME and retail books while the corporate book will continue to hold well, said Sharekhan which has a buy rating on the stock with a target price of Rs 710.

Prabhudas Lilladher (PL) expects SBI's NIIs to stand at Rs 40,385.8 crore, up 29.5 per cent YoY and 6.1 per cent QoQ, in the March 2023 quarter. It sees pre-provisioning operating profit (PPoP) at Rs 25,701.8 crore during the first quarter of the new calendar, rising over 30 per cent YoY, while net profit is seen at Rs 15,477.3 crore, about 70 per cent up.

SBI should continue to report better NII growth of 29.5 per cent YoY and 6.1 per cent, while loan growth would be higher than the industry at 4.7 per cent QoQ. We expect slippages to go up, however, credit costs below 1 per cent. Margin may improve 6-7 bps sequentially, said PL. SBI remains its top pick from the banking space.

SBI’s robust performance has been aided by strong loan growth, margin expansion and lower provisions. The improvement in its treasury performance (which supported other income) and controlled opex led to healthy growth in core PPOP, said Motilal Oswal Finance Services, which has a buy rating on the stock with a target of Rs 725.

A high mix of floating loans, which will benefit from the re-pricing of MCLR loans, will continue to aid NII and earnings, even as the cost of deposits may see some increase. The asset quality performance remains strong with consistent improvements in headline asset quality ratios, while the restructured book remains under control, it said.

 

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