PSU Bank Stock Trading 13.37% Down From 52 Week High, Motilal Oswal Says "Buy" For 33% Upside

Motilal Oswal, a leading brokerage firm, has recommended "Buy" on the stock of State Bank Of India (SBIN) with a target price of Rs 725 apiece. The stock is likely to surge by 33% considering the given target price of the stock and the current market price. SBIN is a leading Public Sector Undertaking (PSU) banking stock having a market capitalisation of Rs 4,86,748 crore. It is a large-cap bank. Below are the key details about the stock:

State Bank of India Stock Performance

The share price of the SBIN last traded at Rs 545.40 apiece on NSE. It gained 0.22% as compared to its previous close of Rs 544.20 apiece. The stock hits 52-week high on 15 December 2022 at Rs 629.55 apiece, trading 13.37% down. The stock hits 52-week low at Rs 425 apiece on 8 March 2022, trading 28.33% up. 

The stock has given 1.34% in the past 1 week. However, in the past 1 month it fell 9.2% and in the 3 months fell 8.17%, respectively. In the past 1 year, it gained 2.85%. In the past 3 years, it gained 69.41%. In the past 5 years, it gained 86.94%. 

Highlights from the management commentary

• The bank expects NIM to remain stable at around the current levels. Margin on the international book is expected to witness a stable or positive bias. 
• FY23 loan growth is expected to be ~14-16%, while the credit cost for 4QFY23 is likely to be similar to 3QFY23. 
• Exposure toward the large corporate group stands at 0.88% of gross advances. A majority of the loans are for operating assets and projects that have been completed and have been generating cash. 

Motilal Oswal Recommends Buy State Bank Of India (SBIN)

According to Motilal Oswal, SBIN delivered a strong quarter, led by margin expansion, treasury gains and healthy loan growth. This, coupled with strong control over opex, resulted in 24% YoY growth in core PPoP. A higher mix of floating loans, which will benefit from loan repricing, will continue to support the NII and overall earnings even as the deposit cost could increase. Asset quality was strong with tight control on slippages and improvement in headline asset quality ratios, with the restructured book under control at 0.9%. "We estimate SBIN to deliver FY25 RoA/RoE of 1.0%/ 17.2%. We maintain Buy with an unchanged TP of INR725 (based on 1.3x Sep'24E ABV + INR200 from subsidiaries)," the brokerage has said. 

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.