Brokerage houses have kept target price in between ₹710-₹810 on State Bank of India (SBI) after the lender reported 35.5% year-on-year (YoY) decline in net profit for the quarter ended December 31, 2023. Following this, the shares of SBI experienced 2% decline on Monday, February 5.
At the time of writing this report, SBI's shares were trading 0.33% lower at ₹648.25 apiece on the BSE.
JPMorgan
maintained its overweight call on SBI, setting a target price of ₹725 per share.
The brokerage noted that the Q3 headline profit after tax (PAT) was impacted by the ₹7,100 crore one-time exceptional item related to pension liabilities.
Despite this, adjusted PAT showed a 2% year-on-year increase with a 16% Return on Equity (RoE), in line with expectations.
JPMorgan expects the fourth quarter to witness another wage revision hike, and FY25 to benefit from moderation in wage costs, driving up operating leverage.
Jefferies, with a buy call on SBI, set a target price of ₹810 per share.
The brokerage highlighted that the reported profit of ₹9,200 crore represented a 35% year-on-year decline, missing estimates due to one-off wage costs.
However, Jefferies noted that Q3 core results were in line with expectations, and net interest margins (NIMs) were managed well, aiding Net Interest Income (NII) growth.
The brokerage remains optimistic about loan growth and asset quality, especially in the retail segment.
On the other hand, Nomura maintained a buy call on SBI with a target price of ₹755 per share.
The brokerage acknowledged the soft NIM and chunky one-off expenses but emphasised SBI's strong loan growth delivery.
Despite softer-than-expected NIM, Nomura views the bank as well-placed amid tight liquidity conditions. Nomura did, however, cut the FY24 earnings per share (EPS) estimate by 13%.
Bernstein issued an outperform call on SBI, setting a target price of ₹710 per share.
The brokerage pointed out that the Q3 exceptional item drove the Return on Assets (RoA) sharply lower to 0.62%. However, excluding this one-time item, RoA remained closer to 1%.
While deposit repricing led to low NII growth at 5% year-on-year, Bernstein noted that SBI continued to experience strong loan growth, primarily led by retail loans.
ALSO READ | SBI's Dinesh Khara addresses pension, DA relief impact on Q3 profit, anticipates Q4 wage hike spillover
(Edited by : C H Unnikrishnan)
First Published: Feb 5, 2024 12:34 PM IST
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