Country’s biggest lender by assets State Bank of India (SBI) crossed Rs 5 lakh crore market capitalisation to become the third lender to touch the landmark after HDFC Bank and ICICI Bank.
With a market valuation of Rs 5.11 lakh crore, shares of the public sector lender traded 2.64 per cent higher at Rs 573 on Wednesday at around 1.10 pm (IST). Meanwhile, the scrip scaled its all-time high level of Rs 574.65. On the other hand, the benchmark equity index BSE Sensex was down 93 points, or 0.15 per cent, at 60,477.93. The market valuation of HDFC Bank and ICICI Bank were at Rs 8.48 lakh crore and Rs 6.40 lakh crore at around the same time.
Market watchers believe that SBI should deliver healthy core-PPOP (Pre-Provision Operating Profit) growth in FY23E and FY24E led by a gradual improvement in net interest margins, lower credit costs and strong loan growth over FY22-24E.
While maintaining a ‘Buy’ rating on SBI, JM Financial on September 11 said, “We see continued outperformance given that it is a key beneficiary of the uptick in systemic credit growth. SBI has protected its asset/liability market share over the last 5 years and with increasing signs of stronger corporate credit demand emerging, we see SBI as one of the best-placed banks to ride the upturn.” The brokerage has set a target price of Rs 660 for SBI, indicating an upside of 15 per cent from the current market price.
On a year-to-date basis, shares of SBI have soared over 24 per cent till September 14. Other lenders including Bank of Baroda, The Federal Bank, IndusInd Bank and AU Small Finance Bank have jumped between 30 per cent and 70 per cent. The 30-share Sensex and BSE Bankex added 3.82 per cent and 15 per cent, respectively, YTD.
Sharing its view on the gross non-performing assets (GNPA), JM Financial added that SBI has navigated through Covid exceptionally well.
“GNPA, NNPA, restructuring have improved to 3.9 per cent, 1.0 per cent and 1.0 per cent (-142bps, -77bps, -1bps YoY). We do not foresee any material asset quality risk and expect NPA ratios to improve further,” the brokerage said.
Chartist Nilesh Jain, AVP- Derivative and Technical Research at Centrum Broking is also positive on SBI with a target price of Rs 600. In an interaction with Sakshi Batra of BT TV, he said, “We may revise the target price to 650. Overall set up is still positive for the bank.”
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