SBI shares extend gains for second day, hit new all-time high; should you buy?

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₹655.6 apiece, surpassing its previous record high of ₹650. The stock has experienced a notable uptrend this month, registering a gain of 15.45%, snapping a two-month declining trend. Nevertheless, looking at the yearly performance, the SBI stock has yielded a return of 6.33% in CY23 so far.

This performance falls short when compared to the Nifty Bank index, which has delivered an 11.66% gain during the same period. Also Read: ICICI Bank stock hits new record high; is there more rally ahead? In addition, the stock's performance in the current year lags behind the CY22 gain of 33.17% and the impressive 67.59% rally recorded in CY21. In November, the banking sector faced headwinds as the Reserve Bank of India (RBI) tightened capital norms for unsecured retail loans, increasing the risk weight on consumer credit for both banks and NBFCs to 125% from the previous 100%.

However, SBI said that the rise in Risk-Weighted Assets (RWA) should not pose any significant challenge for the bank. Also Read: Can Bank Nifty index climb to 50K in current Santa rally in stock market? In its latest note, domestic brokerage firm Motilal Oswal retained its 'buy' call on the stock with a target price of ₹700 apiece. The brokerage believes that the bank is well poised to deliver >1% RoA on a sustainable basis.

"SBIN’s robust performance has been aided by strong loan growth and lower provisions. Opex has been running elevated due to high wage provisions affecting PPoP growth. NIMs have declined in recent quarters, and the management has guided for broadly stable margins (3-5 bp downside bias) as the bank has levers in place (CD ratio, MCLR re-pricing) to mitigate the impact of the rising cost of deposits," said Motilal Oswal.