Buy State Bank of India, target price Rs 1,000: ICICI Securities
ICICI Securities has buy call on State Bank of India (SBI) with a target price of Rs 1,000. The current market price of State Bank of India share is Rs 805.2. State Bank of India, incorporated in the year 1955, is a banking company with a market cap of Rs 718387.29 crore.
SBI key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest and Interest On Balances with RBI and Other Inter-Bank Funds for the year ending 31-Mar-2024.
Investment Rationale
According to the brokerage, SBI sports superior credentials for asset quality on both absolute (GNPA consistently 1%) and relative basis (GNPA much lower vs. peers and system). The bank's track record is rooted in its strong underlying customer profile. Around 80-90% of SBI's unsecured loans are with customers employed with state/central governments and top corporates, including PSUs, fortifying the banks' portfolio; thus, becoming the bedrock of their confidence in its asset quality.
The brokerage estimates rise in net slippages but believe ~50bps of credit costs should suffice as net NPA (~0.6%) appears to have plateaued. Despite a marginal dip in NIM, SBI should be able to sustain ~0.95-0.9% of RoA for FY25-26E, translating to >15% RoE.
The gap with private peers on RoRWA-basis is considerably lower. ICICI Securities has maintained a buy call on SBI with an unchanged target price of Rs 1,000 and says value unlocking / monetisation (YES/NSE) could be near-term triggers.
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