Interestingly, the stock is only 2.75% off its 52-week high of Rs 578.5 hit on Thursday.
Regarding the lender, the brokerage maintained that “a recent drop in yields should lead to a reversal of cash losses and could act as a near-term catalyst. Thus, we maintain our BUY rating on the stock and revise our price target to Rs 650, valuing the main bank at 1.3x FY24 ABV and allocating Rs 192 to the subsidiaries”.
Further on the lender, the brokerage’s report highlighted that SBI enjoys a balance sheet size of over Rs 50 lakh crore with strong retail portfolios along with best operating metrics with the space. Furthermore, the bank recorded a significant improvement in the quality of its assets as well as a healthy provision coverage ratio (PCR).
Also, regarding the outlook for the future, the brokerage mentions that the bank’s margin will continue to be supported by a higher share of variable rate loans. Also, MTM reversals are expected in the coming quarters.
In addition, on the loan portfolio, the bank recorded a growth of 14.9% in the first quarter of fiscal 2023 on an annual basis. In addition, the deposit and CASA ratio improved significantly.
“Asset quality showed sequential improvement with a 6 bps and 2 bps QoQ decline in GNPA and NNPA at 3.9% and 1.0%, respectively. Slippages for the quarter increased to Rs 9,740 crore against Rs | 2845 crore (QoQ) while recoveries and upgrades were at Rs 5,208 crore against Rs 6,756 crore (QoQ).
So in this context, ICICI Direct chose SBI as its first choice in the space. The other bank scripts selected as the brokerage’s best bets are
(target price – Rs 970) and (target price – Rs 215).
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)