State Bank of India (SBI) share price rose as much as 4.4 per cent to Rs 418.90 apiece on BSE, after the bank on Friday reported an 80 per cent surge in net profit in the fourth quarter ended March 2021. The stock price was near its record high of Rs 426.45 apiece, touched on February 18, 2021. In traded volume terms, 20.84 lakh shares have traded on the BSE so far in the intraday. While over 6 crore units of State Bank of India have exchanged hands on the NSE. Most of the brokerages are bullish on SBI share price after its January-March quarter earnings. SBI had earned a profit of Rs 3,580.81 crore during the January-March period of 2019-20. During the quarter under review, net interest income rose 19 per cent to Rs 27,067 crore, from Rs 22,767 crore in the same period a year ago.
Brokerage firms such as JP Morgan, Nomura and Morgan Stanley see up to 50 per cent rally in SBI stock price, following quarter earnings. Fourth quarter operating profit at +25 per cent year-on-year was aided by recoveries in Bhushan Steel (Rs 40bn) partly offset by interest reversals (Rs30bn), said analysts at JP Morgan. “Operating leverage on cost did not play out for the year given wage revisions, increase in deposit guarantee insurance premiums and waiver of account maintenance fees,” they added.
Those at Nomura see a 37 per cent rally in SBI stock price, with a price target of Rs 550 apiece. “We value the standalone bank at 1.3x P/B, SBI Life at Rs 1,175 per share, SBI Cards at Rs 1,100 per share, and SBI AMC at 8 per cent of AuM,” they said. Analysts added that SBI’s asset quality surprised positively with aggregate of slippages and restructuring at Rs 464 bn against guidance of Rs 600 bn. “The second wave of COVID-19 may cause greater distress in the Tier III & below geographies and SBI could face relatively higher NPLs vs. the first wave. But, we feel SBI may still undershoot the FY21 credit cost,” they said.
F21 asset quality was strong despite COVID, given good retail underwriting and a corporate NPL cycle turn, analysts at Morgan Stanley said, giving an ‘overweight’ rating to SBI stock. It has pegged a target price of 600 apiece, implying an nearly 50 per cent rally in the stock price. It added that SBI’s loan book grew 3 per cent sequentially, but was muted on a yearly basis. Retail did well at 16 per cent on-year and should remain strong. Overall loan growth will require corporate and SME to accelerate – likely a 2022 event. “We estimate 8 per cent loan growth in F22 and 12 per cent in F23, and build in 5-10bps margin improvement in each of the next two years,” analysts said.
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