February 15, 2024 / 01:15 PM IST
Stock Market LIVE Updates | Motilal Oswal View on SBI:
State Bank of India (SBI) has delivered a strong performance in recent years, propelled by steady business/revenue growth and controlled provisions. Opex has been elevated due to high wage/pension provisions affecting PPoP growth; however, expect earnings to gain traction from FY25 onwards after this opex blip.
NIMs have declined in recent quarters and the management has guided for broadly stable margins going forward as the bank has levers in place (CD ratio, MCLR re-pricing) to mitigate the impact of the rising cost of deposits.
The asset quality performance remains strong with consistent improvements in headline asset quality ratios, while the restructured and SMA books remain under control at 0.5% and 12bp of loans, respectively.
Broking house estimate credit costs to remain in control at 35-40bp, enabling a 22% earnings CAGR over FY24-26E. Estimate SBIN to deliver RoA/RoE of ~1.1%/19-20% over FY25-26.
SBI remains preferred Buy in the sector with a Target Price of Rs 860 (1.2x FY26E ABV + INR244 from subs).
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