After the strong performance of SBI in the second quarter (July-September 2021), its shares are being upgraded. HSBC has given a BUY rating with a target price of 650. According to HSBC, the bank management has indicated that its margins will remain stable in the range of 3.2 to 3.3 per cent. The cost to income ratio of the bank will decrease because the expense growth will be less than the income growth. The management appears confident of increasing market share on the back of projected 10 per cent growth in loan growth.
HSBC raises EPS estimate for up to three years
According to HSBC, the asset quality of the bank’s Express Credit loan is looking very good. A major segment of corporate loans is witnessing slippage and a major part of retail restructuring is in the home loan segment. The bank has distributed Rs 260 billion under the Emergency Credit Line Guarantee Scheme. But two percent of it has become NPA. However, HSBC has increased the EPS for the financial years 2021-22, 23 and 24 to 6.5, 5.9 and 2.9 per cent respectively. It has revised the margin. Operating income and credit cost estimates have also been raised.
Buying on EMI with SBI card will be expensive, bank prepares to levy processing fee
Target price raised from Rs 530 to Rs 650
According to the brokerage firm, SBI’s core banking business can be re-rated. Its credit growth is showing a 10 to 20 per cent acceleration and the Return on Equity (ROE) is estimated at 15 per cent. This can lead to an increase of 40 percent in EPS. HSBC believes that SBI will get good growth from other business besides core business. HSBC has increased its target price from Rs 530 to Rs 650 due to good expectations of the bank’s performance. Along with this, it has given it a BUY rating.
The consolidated net profit for the second quarter ended September of the current financial year was up 69 per cent to Rs 8,889.84 crore. With this, the public sector bank had made a net profit of Rs 5,245.88 crore in the same quarter of the previous financial year. After such good results in the second quarter, the stock price of the bank reached a record high of Rs 542 per share.
Get Business News ,, latest India News ,, and other breaking news on share market, investment scheme and much more on Business Khabar. Like us on Facebook, Follow us on Twitter for latest financial news and share market updates.
.