Buy State Bank of India, target price Rs 600: Motilal Oswal


Motilal Oswal has buy call on with a target price of Rs 600. The current market price of State Bank of India is Rs 410.3. Time period given by analyst is one year when State Bank of India price can reach defined target.

State Bank of India, incorporated in the year 1955, is a banking company (having a market cap of Rs 362963.95 Crore).

Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 93266.94 Crore, down -9.83 % from last quarter Total Income of Rs 103430.64 Crore and up 6.00 % from last year same quarter Total Income of Rs 87984.33 Crore. The bank reported net profit after tax of Rs 7379.91 Crore in latest quarter.


Investment Rationale
SBIN has historically delivered over 15% RoE for 10 years, before the worst phase of the corporate cycle hit earnings, to the point that the bank reported back-to-back losses in FY17/FY18. It reported a strong FY21/1QFY22 in a challenging environment. Deposit growth stood strong, led by healthy CASA trends, while loan growth is likely to recover gradually over FY22-23E. Asset quality outlook remains particularly encouraging. The management has improved PCR to ~68%. Continued recoveries would further support the earnings momentum. SBIN holds unutilized COVIDrelated provisions of ~INR91b, which should limit credit cost. SBIN has reported a RoE of ~9.5% in FY21 – the highest since AQR started in FY16 and is now aiming to reclaim 15% RoE in the medium term. The brokerage projects a RoA/RoE of 0.8%/14.6% by FY23E, and reiterate SBIN as top BUY with a TP of INR600/share (1.4x FY23E ABV + INR190/share from subsidiaries).

Promoter/FII Holdings
Promoters held 56.9 per cent stake in the company as of June 30, 2021, while FIIs held 11.4 per cent, DIIs 24 per cent and public and others 7.6 per cent.

(Disclaimer: Views and recommendations given in this section are the analysts’ own and do not represent those of ETMarkets.com. Please consult your financial adviser before taking any position in the stock/s mentioned.



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