SBI Stocks Outlook: After the impressive results for the March quarter of FY 2021, the shares of SBI, the country’s largest public sector bank, are seeing good growth. In the business of May 24, SBI’s stock has risen nearly 3 per cent to Rs 419. On Friday, it closed at Rs 401 on the day of the results. In fact, in the March quarter, the bank’s profit has increased by about 80 percent. During this time, where the bank has been successful in improving asset quality, the performance of the bank has been better all round. At the same time, the bank has announced a dividend of 4 rupees on every share to the shareholders for the financial year. After the results, brokerage houses are looking positive on the stock and are recommending investment.
Improvement in asset quality
SBI’s gross NPA has come down from 5.44 per cent to 4.98 per cent on a quarterly basis in the March quarter. At the same time, net NPA has been reduced from 1.81 per cent to 1.50 per cent. SBI’s gross NPA has come down from Rs 1.34 lakh crore to Rs 1.26 lakh crore on a quarterly basis in rupees. At the same time, net NPA has come down to Rs 36,810 crore from Rs 42,797 crore in the previous quarter.
Profit up 80 percent
SBI’s profit has increased by 80 per cent to about Rs 6451 crore. There has been a jump in the fourth quarter profit as the bank grew, net interest income increased other income and reduced provisioning for bad loans.
SBI’s net interest income has increased by 18.9 per cent to Rs 27,067 crore. While loan growth has been 5 percent on an annual basis. On an annual basis, the provisions of SBI have decreased by 18.1 percent.
Brokerage House Opinion
Brokerage house Motilal Oswal has advised to invest in the stock by including it in the top pick. The brokerage has set a target of Rs 530 for the stock, which is 32 per cent higher than Friday’s closing price of Rs 401. The brokerage house says that SBI’s performance has been strong amidst the challenges of Corona virus. Loan growth has been as expected, while asset quality has improved. The bank seems to be on the right track in terms of controlling credit cast.
Kotak Institutional Equity has also given an outperform rating on the stock of SBI and has set a target of Rs 470 for the stock. According to the report, the asset quality of the bank is strong and RoE is getting support from the recovery. The effect of COVID is gradually weakening on the bank. EPS estimates have been raised due to lower provisioning. Its EPS estimate has been increased by 2-8 per cent.
In foreign brokerage houses, CLSA has given a buy rating on SBI and has set a target of Rs 650 for the stock. Morgan Stanley has also given an overweight rating on SBI and has set a target of Rs 600 for the stock. Nomura has given an overweight rating on SBI and has set a target of Rs 550.
(Note: We have given information here based on the bank’s quarterly results and brokerage house report. Given the risk of the stock market, be sure to consult experts at your level before investing.)