SBI shares surge over 5% as brokerages bullish after Q4 earnings

Asset quality improved sequentially with 42 bps decline in gross non-performing assets (GNPAs) and 79 bps slip in net NPAs.

Some prominent analysts have reduced their target prices but retained their bullish stance on the stock due to the improvement in NPAs and cheap valuations as compared to other peers.

Credit Suisse maintained 'overweight' on the stock with target price increased to Rs 230 from Rs 200 earlier. Q4 results surprised positively on asset quality trends and loans under moratorium, said the brokerage.

It further added, "The asset quality vulnerabilities are lower relative to other PSUs but expect FY21 loan growth to remain in single-digit. Also, expect excess liquidity to keep FY21 NIMs under pressure."

Jefferies maintained its 'hold' rating on the stock with target price raised to Rs 205 from Rs 200 earlier. Deposit franchise is SBI's key strength to grow loans and de-risk, it said.

Meanwhile, Motilal Oswal maintained a 'buy' call with a target of Rs 280 on the stock. The brokerage cut the earnings estimates for FY21/FY22 by 17/16 percent as it built in a slight moderation in margins/fee income and higher credit cost and project return on asset (RoA)/return on equity (RoE) of 0.5/9.5 percent by FY22.

Emkay Global retained its 'buy' rating on the stock with a revised target at Rs 225 from Rs 300 earlier as it expects RoA/RoEs to dip to 0.2/4 percent in FY21, but to gradually improve back to 0.5/10 percent in FY23.

"Lower loan provisioning on account of the moratorium compared to other lenders was disappointing," it added.