SBI Shares Prices Soar More Than 3%; Should You Buy, Hold, or Sell?

The prices of State Bank of India zoomed past 3 percent on Monday as it hit the intraday high of Rs 461 on BSE soon after it announced a surge of 41 % in its net profit at Rs 9113.5 crore. Reports state that this year's net profit of SBI is its highest ever. Earlier, SBI reported 15.3% surge in net interest income (NII) at a whopping Rs 31,198 crore.

Meanwhile, brokerages remained quite optimistic on SBI shares and expect a strong surge of 51% amid a boost in credit growth, gradual growth in return profile and asset quality.

Experts feel that SBI may gain 0.8 % and 14% in ROA and ROE by the next financial year amid reports of strong balance sheet progress with stronger PCR and consistent asset quality.

The big question remains that should you buy, hold, or sell the SBI shares? According to ICICI Securities' experts, State Bank of India posted 13.9% RoE and 0.67% RoA in the current financial year amid growth in credit and cost below 1% and robust growth build-up. SBI's credit growth soared in fourth quarter of FY22. Analysts said, "Credit growth gathered pace in Q4FY22 led by sequential uptick in corporate and retail. Slippages were curtailed at 0.4% and GNPAs settled at 3.97%, a decadal low. "PAT growth of >40% to Rs 91.1 billion was below I-Sec and consensus expectations due to higher overhead costs and investment depreciation. Improved visibility on asset quality with 'new normal' credit cost of 1%, credit growth of 13%/15% for FY23E/FY24E, asset resolution and stable NIMs will drive RoE to >16% by FY23E/FY24E and valuations to 1.5x Sep'23E book," the brokerage said. It maintained a 'buy' call on the stock with a target price of Rs 673 per share."

According to Motilal Oswal, SBI excelled in Q4 of FY22 with STURDY growth in NII and meticulous provisions. The growth in loans remained outstanding. The management feels that momentum should stay healthy as utilization levels boost. Retail growth may remain stable. According to Motilal Osawal's analysts: "A higher mix of floating loans and CASA mix will support margin in a rising interest rate environment. Asset quality performance has been strong. The outlook remains strong as the restructured book remains in control at 1.1%, while the SMA pool has declined further to 13bp of loans." The brokerage expects the SBI to deliver a RoA/RoE of 0.9%/16.7% in FY24. "The bank remains our conviction Buy in the sector," it said. Motilal Oswal revised target price to Rs 600/share (1.2x FY24E ABV + Rs 195 from its subsidiaries."