The market capitalisation of
State Bank of India (SBI), the country's largest lender by assets, surpassed the
₹7 lakh mark for the first time on Wednesday (March 6). The stock also hit a record high of
₹790.30, rising 2% on NSE. The shares of SBI have risen 23% so far this year and gained 40% in the last one year.
The state-owned lender had also reclaimed the status of the
most-valued PSU last month by overtaking LIC in market capitalisation.
Top firms by market cap (₹ lakh cr)
| RIL | 20.28 |
| TCS | 14.51 |
| HDFC Bank | 10.94 |
| ICICI Bank | 7.63 |
| SBI | 7.01 |
On the charts, the 14-day relative strength index (RSI) of the stock stood at 72.9, indicating the stock is overbought. This implies that stock may show pullback.
SBI shares have 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, 150 day and 200 day moving averages.
What analysts say on SBI
Analysts at JM Financial recently hosted management team of SBI at JM Financial India Conference (Singapore) 2024 where management exuded confidence on sustaining its strong performance into FY25 as well. Given strong macro environment, management remains confident of achieving 15% loan growth, which is emanating from its comfortable LDR ratio (67% domestic) despite systemic pressures on deposits.
Key highlights of the call include:
i) Wholesale credit demand is picking up momentum and will be driven by private sector to drive 15% loan growth in FY25E,
ii) Management remains confident of sustaining margins and does not expect meaningful inch up in MCLRs
iii) Provisions against wage revisions and pension rationalization were one-time expenses and thus employee costs would normalize from FY25E onwards with slight uptick,
iv) Gross non-performing assets (NPAs) likely to improve further and thus credit costs would remain contained, and
v) Aims to deliver return on assets (RoAs) of 1-1.1% with return on equities (RoEs) of 15-18%.
The brokerage believes SBI remains well-positioned to navigate the tight systemic liquidity given its strong liability franchise and as growth visibility increases. It believes the lender could rerate higher.
JM Financials' earnings estimates for SBI are 8.1% and 6.1% above consensus for FY25E and FY26E, respectively.
The brokerage has maintained a 'Buy' rating on the counter with a target price of ₹860 per share.
Sharp decline in interest rates and relapse of asset quality pressures are key risks to its call, JM Financial said.
Brokerage Sharekhan, which has a target price of ₹915 on the banking stock, expects SBI to sustain steady performance in the near to medium term on the back of stable asset quality outlook. An improvement in underwriting, lower SMA book and higher provisions on stressed assets should keep incremental slippages under control. Thus, Sharekhan believes that normalisation of credit cost is expected to be very gradual until we see a major economic downturn.
"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 ₹915," the brokerage said.
First Published: Mar 6, 2024 3:11 PM IST
