India’s largest public sector bank continues to demonstrate its market leadership with impressive quarterly performance, drawing significant attention from leading market analysts and investors.
The bank’s robust financial health, particularly its strong Treasury income and steady net interest income, has prompted major brokerages to maintain their bullish stance.
Share Price Movement
The share price of SBI went up by 0.89 percent to Rs. 815.80 per share on Thursday, an increase from its previous close of Rs. 808.6 per share. The market capitalisation now stands at approximately Rs. 7,19,859 crore as of November 14, 2024.
What Happened
Motilal Oswal Financial Services has maintained a “Buy” rating on State Bank of India (SBI) with a target price of Rs 1,000, citing strong quarterly performance and robust treasury income.
The broking highlights SBI’s steady Net Interest Income (NII) despite an 8bp quarter-on-quarter margin moderation. They remain confident about the bank’s ability to maintain current NIM levels through CD ratio management and MCLR repricing.
The firm’s positive outlook is further supported by SBI’s healthy credit growth and improved asset quality, with steady deposit growth observed after a sluggish first quarter, despite ongoing moderation in the CASA mix.
Q2 Financial Highlights
According to its recent filing, in the quarter ending September 2024, SBI’s net interest income increased by 5.37 percent YOY from Rs. 39,500 crore in Q2 FY24 to Rs. 41,620 crore in Q2 FY25.
The company’s net NPA has decreased by 11 bps, from 0.64 in Q2 FY24 to 0.53 in Q2 FY25. Furthermore, the adequacy ratio declined by 52 bpas from 75.45 in Q2 FY24 to 75.66 in Q2 FY25.
Market Outlook
India’s fintech industry is experiencing remarkable growth, expected to reach US$ 421 billion by 2029 from its current US$ 111 billion valuation. The sector’s expansion is driven by rapid digitalisation, with digital payments projected to reach 65% market share by 2026. Recent innovations include India’s first UPI-ATM and digital KCC loans.
The banking sector shows strong fundamentals, with 602 banks using UPI, processing 15.08 billion transactions worth US$ 25.27 billion. Policy support through the RBI’s digital currency pilot and financial registry initiatives further strengthens the industry’s growth prospects.
Also read….
Target Price
Motilal Oswal maintains a “Buy” rating on SBI with a Rs. 1,000 target price, representing a 23% upside. Their bullish stance is backed by strong quarterly results, robust Treasury income, and steady net interest income.
ICICI Securities sets a target of Rs. 1,000 (23% upside), citing SBI’s strong Q2FY25 performance with 1.17% RoA and potential market share gains. They highlight SBI’s minimal exposure to risky segments and project FY25/26E RoA of 100/90bps.
Axis Direct recommends a “Buy” with a Rs. 1,020 target price (25% upside). They view SBI as the best PSU bank play on India’s growth trajectory, citing a comfortable CD ratio, healthy PCR, adequate capital, and improved asset quality.
Shareholding Pattern
As of the November 2024 shareholding pattern, SBI Limited is primarily held by the promotors at 57.51 percent, foreign institutional investors hold 10.71 percent, and the public with 7.67 percent.
About Company
State Bank of India (SBI), founded in 1806 as the Bank of Calcutta, stands as India’s largest and oldest public sector bank. Headquartered in Mumbai, it plays a crucial role in the nation’s financial services sector. With a market capitalisation of approximately ₹7.1 lakh crore as of June 2024, SBI commands a significant share of India’s banking landscape.
The bank’s operations span retail banking, corporate services, Treasury functions, and international banking. SBI offers a wide array of services, including savings accounts, loans, insurance, and investment solutions. It also stands out for its digital banking services, such as the YONO app, enhancing customer accessibility and convenience. With nearly 250,000 employees, it also remains one of India’s largest employers.
Looking ahead, SBI continues to focus on digital transformation and sustainability. Expanding its international presence, it remains committed to offering innovative, responsible banking solutions to millions globally.
Written By Fazal Ul Vahab C H
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
Start Your Stock Market Journey Today!
Want to learn Stock Market trading and Investing? Make sure to check out exclusive Stock Market courses by FinGrad, the learning initiative by Trade Brains. You can enroll in FREE courses and webinars available on FinGrad today and get ahead in your trading career. Join now!!
