BackSBI shares: Emkay Global sees 40% rise in State Bank of India stock in 12-month
SBI share price: State Bank of India has promised above-systemic credit growth of around 9.5 to 10 per cent in FY22E
PremiumSBI share price: After the outbreak of Russia-Ukraine war, State Bank of India or SBI shares have remained almost unaffected despite weakness in global equity markets. After losing for few sessions, the banking major has been able to remain strong throughout this month. According to Emkay Global research report, SBI's growth and margins are expected to improve and such strong fundamentals of leading Indian commercial bank may fuel its stock price up to ₹680 apiece levels in next 12 months. They have advised long term positional investors to buy SBI share for this one year target and book around 40 per cent profit in one year time.
Expecting better core profitability; Emkay Global said, "SBI has promised above-systemic credit growth of around 9.5 to 10 per cent in FY22E. It also expects +100bps above nominal GDP growth in FY23E. We have slightly trimmed our FY23 credit growth estimate for SBI by 100bps to near 12.7 per cent from 13.7 per cent, factoring in some moderation in GDP growth amid the Russia-Ukraine conflict, but expect the growth to improve to the tune of 15/16 per cent by FY24E/25E. SBI should benefit on the margin front in a rising rate cycle, given its continued cost advantage, higher retail orientation (including better-yielding Xpress Credit), and most importantly, better LDR. We expect FY22-24E core-profit CAGR of 20 per cent, in line with private peers."
Hailing SBI's focus on digital business, the research report said, "SBI believes that 'Digital' is going to be the soul of future retail/corporate banking, and is stepping up its digital offerings via YONO 2.0 App and fintech tie-ups. For the first time, the bank has hired a marquee private banker (Mr. Nitin Chugh - ex digi-banking head of HDFCB) as DMD to ramp up its digital offerings in line with its private peers. According to management, it has 45mn customers on YONO App, out of its 460mn customers, and is currently onboarding 1mn customers per month. Further, nearly 30 per cent of retail assets/67 per cent of savings a/cs are opened via YONO, which the bank expects to rise meaningfully, leading to a better cost-income ratio in the long term."
On valuations and risk adjustment return of SBI, Emkay Global report said, "After the recent market correction due to the Russia-Ukraine conflict, SBI is trading at attractive valuations of 0.9x Mar'24E P/ABV. SBI has come a long way and is now far better placed in terms of capital, asset quality and earnings as demonstrated during the Covid peak. In our view, the bank's higher retail orientation and steady improvement in risk-adjusted returns (RoRWA) call for a sustained re-rating."
On its suggestion to positional investors in regard to SBI share price; Emkay global research report said that one can buy SBI shares for 12-month target of ₹680 apiece levels.
For information to readers, SBI share price today at NSE is ₹491.80 per share levels.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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