State Bank of India Stock Price: The new financial year has started. The market has entered the new year at a time when there is volatility due to geopolitical tension and inflation. Experts have mixed views on the new financials and expect the market to remain in the range […]
State Bank of India Stock Price: The new financial year has started. The market has entered the new year at a time when there is volatility due to geopolitical tension and inflation. Experts have mixed views on the new financials and the market is likely to remain in the range. However, banking stocks may perform better this year due to economic recovery. In such a situation, it is time to add it to the strong banking stock portfolio. Brokerage house Axis Securities has included State Bank of India (SBI), the largest public sector bank in its top pick. The brokerage says that due to strong capitalization, better loan book and asset quality (SBI) is better positioned than its peers.
Loan book, asset quality better
According to brokerage house Axis Securities, SBI’s unsecured lending profile is strong with 90 per cent of salaried government employees. Retail book traction is healthy at 15%. While it is backed by Home Loans and Express Credit, further improvement is likely in the next quarters. The market share of the bank in home loans and auto loans is more than 20 per cent. There is a steady improvement in asset quality. The loan book is improving and ROAs are expected to recover after 6 years of down cycle and may recover in the historical range of 0.7%-1%.
Valuation and target price
Among PSU banks, SBI is in the best position to take advantage of the economic recovery. The bank is in a strong position due to its healthy PCR, strong capitalisation, a strong liability franchise and superior asset quality. Brokerage believes that due to normalization of credit cost and better operational performance, the bank’s ROEs can be 15 per cent by FY22-24E. The brokerage house has given investment advice keeping a target of Rs 720 for the stock. The share price is around Rs 500. In this sense, 45% return can be given in this.
(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.)
