Motilal Oswal Initiates Buy On This Large Cap Banking Stock, Scrip Jumps 230.39% In 3 yrs

Motilal Oswal Financial Services initiates a Buy on State Bank of India (SBIN) with a target price of Rs. 700 apiece. The stock is likely to give a robust upside of 23% if purchased at the current market price. SBIN is India's biggest bank with a pan-India presence. It is a large-cap stock with a market capitalisation of Rs. 5,09,818 crore.

Valuation and view: RoE to sustain at 18% over FY24-25E; reiterate BUY with a TP of INR700

According to Motilal Oswal Financial Services, SBIN delivered a strong performance in FY23, propelled by steady business/revenue growth and controlled provisions. "We estimate the momentum to remain healthy as utilization levels improve, while Retail growth is likely to remain steady. A higher mix of floating loans and CASA mix will support margins even as the cost of deposits picks up at a faster pace. Asset quality performance has been strong and the outlook remains healthy as restructured book remains in control at 0.8% and the SMA pool has declined further to 10bp of loans," the brokerage has said.

It added, "We estimate the credit cost to remain in control at 0.5% over FY23-25, enabling a 15% earnings CAGR over FY23-25E. We estimate SBIN to deliver sustainable RoA/RoE of ~1.0%/18% over FY23-25. SBIN remains our preferred BUY in the sector with a TP of INR700 (premised on 1.1x FY25E ABV + INR205 from subs)."

Stock Outlook

On Friday, the stock ended 0.84% higher at Rs. 571.25 apiece with Rs 639.55 apiece 52 week high and 430.70 apiece 52 week low.

The stock declined 1.29% in the last 1 week and 2.57% in the last 1 month, respectively. It gave 29.36% positive return in the last 1 year. In the last 3 years, it gave 230.39% robust return. In the last 5 years, it gave 105.89% positive return.

Disclaimer - The above-mentioned banking stock has been picked from the brokerage report of Motilal Oswal Financial Services. 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.