SBI shares: Emkay Global sees 40% rise in State Bank of India stock in 12 months | Rare Techy


SBI share price: After the outbreak of the Russia-Ukraine war, State Bank of India or SBI shares remain almost flat despite weakness in global equity markets. After losing several sessions, the banking major managed to remain strong throughout this month. According to a research report by Emkay Global, SBI’s growth and margins are expected to improve and such strong fundamentals of India’s leading commercial bank may boost its stock price. 680 levels each in the next 12 months. They advised long term position investors to buy SBI shares for one year for this purpose and record 40 percent profit in one year.

Expectation of better basic profit; Emkay Global said, “SBI has promised a supra-systemic credit growth of around 9.5 to 10 percent in FY22E. It also expects +100bps above the mentioned GDP growth in FY23E. We have estimated credit growth of FY23 cut by 100bps for SBI to close to 12.7 percent from 13.7 percent, some moderation in GDP growth amid Russia-Ukraine conflict, but growth expected to improve to 15/16 per cent by FY24E/25E. SBI should benefit on the margin front. higher rate cycle, due to its continued cost advantage, higher sales trend (including better Xpress Credit), and most importantly, better LDR. We expect FY22-24E CAGR-based profit of 20 percent, compared to private peers.

Hailing SBI’s focus on digital business, the research report said, “SBI believes that ‘Digital’ will be the soul of retail/corporate banks of the future, and through the YONO 2.0 App and fintech connections, its offerings is increasing its digital offerings. For the first time, the bank has appointed a private banker (Mr. Nitin Chugh – former head of digi-banking at HDFCB) as DMD to enhance its digital offerings compared to its private peers. According to the management, It has 45 million customers. The YONO app, out of its 460 million customers, and now includes 1 million customers per month. In addition, 30 percent of sales assets / 67 percent of savings are opened through YONO, which the bank expects makes it meaningfully higher, and leads to a better cost-income ratio in the long run.”

On SBI’s valuation and risk-return profile, the Emkay Global report said, “After the recent market correction due to the Russia-Ukraine conflict, SBI is trading at an attractive valuation of 0.9x Mar’24E P/ABV. SBI has come a long way.” .and is now much better positioned in terms of capital, asset quality and earnings as seen during the peak of Covid. In our view, the bank’s high sales trend and continued improvement in returns at risk (RoRWA) calls for a constant re-evaluation.”

On its recommendation to position investors regarding SBI’s share price; Emkay global research report said one can buy SBI shares for 12-month target 680 levels each.

For the information of the readers, the share price of SBI is today on NSE 491.80 per share level.

Statement: The views and recommendations made above are those of individual analysts or brokerage firms, and not those of Mint.

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