New Delhi: (Equity Watch Bureau) Who would have thought there would be a day when most brokerage firms would give State Bank of India (SBI) shares an estimate as high as Rs 750 – an upside of 30 percent from the current market price. But here it is, shares are at the forefront of a comeback in the PSU banking pack on Dalal Street. After a strong show in September quarterly result, SBI shares have extended their dream run further. SBI shares have fetched investors a massive 141 percent return in the past year which is way ahead of Nifty Bank (43 percent), Nifty PSU Bank (117 percent) or Nifty Private Bank (31 percent) indices.
The PSB share has given a return of 47 percent in the past 6 months, 22 percent in the past 3 months while 15 percent in past one month. Most of the peer banking shares, except for PSB shares Indian Bank and Canara Bank get a beating by SBI during the past one year. Bank of Baroda has got the investors 127 percent return in past one year while ICICI bank has got 70 percent. PNB has return rewarded investors with 50 percent, IndusInd Bank with 38 percent, Axis Bank with 33 percent, Kotak Mahindra Bank with 21 percent, and HDFC Bank with 18 percent in past one year.
The index heavyweight has reported a standalone second-quarter net profit of Rs 7,626 crore, which is the highest ever for the Bank, up almost 67% over last year. This compares with Rs 4,574 crore in the corresponding quarter of last year (Q2FY21). SBI's net interest income rose 29 percent, and exceeded analysts' prediction by 8.5 percent. The lender's net interest margin (NIM) – a key measure of profitability for lenders – rose by 16 basis points to 3.5 percent.
After the September quarter results, SBI Chairman Dinesh Kumar Khara said that the bank expects credit growth of 9-10 percent in FY22, and the NIM to be in the range of 3.1-3.25 percent.
"We have already registered credit growth of about six percent-plus and our international book is doing very well that is growing at 16 percent-plus. Retail is doing very well. Corporate was the only one which was pulling us down," he said speaking to CNBC-TV18. Khara also said the bank does not see a concern with regards to its asset quality both in the corporate and retail segments.
Most analysts give SBI shares estimates as high as Rs 750 – an upside of good 30 percent from the current market price. The analysts believe that there is sustained improvement in the asset quality which is why earnings are likely to stay strong with economic recovery. Some brokerage firms have given signals to buy the share while some have suggested caution. Like Jefferies that has downgraded the SBI stock to 'hold' from 'buy', though raised its target price to Rs 600 from Rs 550. Nomura, however, maintains its 'buy' call on SBI but raised its target price to Rs 630, suggesting an upside of 19 percent. Hemen Kapadia of KRChoksey Securities suggests booking partial profits or avoiding going long in SBI now.
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