Global Brokerages See Up To 44% Upside For SBI

The public sector lender has posted robust September numbers better than even street expectations and viewing it several global brokerages have raised its target price. You got it right we here are talking about State Bank of India (SBI).

The firms that have increased price target for SBI stock include Morgan Stanley, Credit Suisse, JPMorgan, and HSBC. After the stock posted its earnings, the stock scaled to a 52-week high price of Rs. 542.2. On losses in the Bank Nifty, SBI stock trades lower by over 2 percent today at Rs. 520.85 per share.

As per Goldman Sachs, the PSB is well positioned to offer strong profitability over next few years, said the brokerage. On the other hand, CLSA says the company has performed well on most parameters with core margin improving quarter on quarter by 15 bps. RoE has been now at 15 percent with potential upsides.

The asset quality of SBI & large private peers indicate undershooting of credit costs from H2. CLSA increase EPS estimates by 3-5% for FY23-24 & now expect 1% ROA & +15% RoE.

SBI profit during the September quarter jumped 66.7 per cent to Rs 7,626.6 crore as compared to Rs 4,574.2 crore in the same quarter a year-ago period. "The asset quality outcomes are very encouraging to us, while weak credit growth is a concern", says research firm Macquarie believes that believes the core price to book value is cheap.

PPoP growth will accelerate as growth/rate cycle turns, says Morgan Stanley
The peak in NIM and low net slippages are the key positives, while PPoP trend should correlate with loan growth hereon. FY23F should reflect a normalised RoA & RoE at 0.9% & 16% respectively, says Nomura.

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