SBI Share price: Sharekhan maintains Buy with price target of Rs 460
SBI share price today is Rs 364.5 up by 0.1%. SBI performance over the week has seen it move by 3%, from Rs 355 to Rs 364.5. In its report today, Sharekhan says State Bank of India (SBI) is attractive (with respect to asset quality, capitalisation, underwriting strength) and going forward, it expects NII and profitability to reflate in the next 2-3 years
SBI share price today is Rs 364.5 up by 0.1%. SBI performance over the week has seen it move by 3%, from Rs 355 to Rs 364.5. In its report today, Sharekhan says State Bank of India (SBI) is attractive (with respect to asset quality, capitalisation, underwriting strength) and going forward, it expects NII and profitability to reflate in the next 2-3 years. According to Sharekhan, recovery trends indicate a gradual but sustained pickup in economic activity, and SBI, by virtue of being the largest bank, with strong business strengths (market maker in terms of deposit rates; margins protected) is attractively placed. Moreover, the bank’ strong asset-quality position indicates better profitability in the medium term, which will help reflate NII and earnings.
Sharekhan says that it expects intermittent surprises in terms of recovery and resolutions to further support profitability. Sharekhan said, "Supportive regulatory stance of pro-growth policies, extension of ECLGS scheme and GDP growth recovery in FY2022E augur well for SBI’s growth outlook."
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Technical Analysis on SBI
Chandan Taparia, Derivative & Technical Analyst, Motilal Oswal Financial Services says that SBI is set to negate lower top - lower bottom on weekly scale and has filled in the gap on daily scale while taking support at its 50 DEMA. He added, "SBI has its support levels at Rs 355 for an up move towards Rs 383 zones."
Sharekhan says factors such as encouraging performance, strong balance sheet, and market share gains, among others, can be drivers for re-rating of SBI stock. Sharekhan maintains Buy on the stock with an unchanged SOTP-based price target (PT) of Rs. 460.
SBI Asset Quality:
1. GNPA/ NNPA stood at 5.44% /1.81% against reported GNPA of 4.77% and NNPA of 1.23%, indicating well-contained book quality.
2. Provision coverage ratio (PCR) has improved to whopping 90.21% and, notably, with collection efficiency at 96.5%, Sharekhan expects full-year slippages to be well within management’s guidance of Rs 60000 cr (so far only Rs 41216 crore done).
3. SBI’s retail asset quality has been robust (<50 bps credit costs) over the last decade and, with the end of the corporate credit cycle, SBI’s asset quality is finally emerging from the shadows to deliver better asset-quality outcomes.
4. As the economy is expected to revert to strong growth in FY2022E and beyond, banks and industry leaders such as SBI are well placed to capitalise on the opportunity.
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