SBI shares: Why brokers are bullish on the bank’s stock despite Q1 miss | Rare Techy

The lender took a hit on account of the MTM losses as far as it goes ₹6,549 crore on its investment book, which negatively impacted its Return on assets (RoA) and Return on equity (RoE), which declined by 9 basis points (bps) and 203 bps, respectively.

“SBI delivered a moderate 1QFY23, weighed down by higher MTM losses of INR65.5b and a modest decline. However, strong control on OPEX enabled 14% YoY growth in core PPOP .Credit growth has been strong, and the bank expects to continue the expansion with Retail leading the torch. Stability in the rate environment prevents further MTM losses. The high mix of current loans, which will result in re-pricing leveraged loans will support NII and the overall earnings trend in the coming quarters,” said brokerage house Motilal Oswal.

Its asset quality performance was stable, with a marginal improvement in headline asset quality, despite a seasonally weak first quarter, while the restated book remained under control at 1%. SBI maintains its top belief as a Buy in the banking sector and has revised its target price on SBI shares. ₹625.

“SBI’s net profit growth was impacted by the loss of MTM. The bank currently charges 75% PCR, along with 105 bps on standard loans. Current coverage ratios reflect a healthy supply buffer. Given the positive capital quality outlook, the cost of credit is expected to remain negative (~1%). The independent bank is currently trading below book value for a potential ROE of 15% by FY24E, said another brokerage house Nirmal Bank while assigning Buy on the bank’s stock with a target price (TP ) continues. ₹678 per share.

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