SBI is in a position to make the most of the economic recovery. At the same time, in terms of capital, asset quality and earnings, it is also in a stronger position than Pierce.
SBI Stock Price: The shares of the country’s largest state-run bank SBI are seeing a rise of close to 1 percent today. The stock has given positive returns this year even in this volatile market. Brokerage house Emkay Global is bullish on the stock and has given Nivea advice with a target of Rs 680. Brokerage says that this state-owned bank is in a position to take maximum benefit of further economic recovery. At the same time, in terms of capital, asset quality and earnings, the bank seems to be in a stronger position than peers or other banks in the sector. The current valuation of the stock is attractive and high returns are expected from here.
How much return can I get
The brokerage house has set a target of Rs 680 for the stock of SBI. The current price of the share is Rs 491. In this context, it is expected to give 39 to 40 percent return in the future. The brokerage says that the growth of the bank will be better going forward. Core profitability is good and is expected to remain better going forward. Credit growth may be 9.5-10 per cent in FY22E.
credit growth forecast
The brokerage house has cut its credit growth forecast for FY23 from 13.7 per cent to 12.7 per cent. The brokerage says that there may be some impact on GDP growth due to the Russia and Ukraine crisis, due to which credit growth estimates have been cut. But this growth may improve to 15 per cent/16 per cent in FY24E/25E.
Improving the asset quality of the bank
The brokerage says that the bank will also get the benefit of the rising rate cycle. Retail hold is strong. With the improvement in corporate activity, this segment will also be strengthened. The core profit of the bank for FY22-24E may be 20 percent CAGR. The bank will also benefit from digital adoption in a better way. With the normalization of credit cost, the asset quality of the bank has also improved. SBI’s GNPA ratio has come down continuously. The restructure book has also come down to 1.6 per cent of the total loan. The retail and agri portfolio has strengthened. The brokerage expects the bank’s RoAs/RoRWA to improve to 0.9%/1.6% by FY24E.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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