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Business News/ Markets / Stock Markets/  SBI share price gains after Q1 results; here is why analysts see 24% to 32% more upside
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SBI share price gains after Q1 results; here is why analysts see 24% to 32% more upside

SBI share price gained as much as 1.13% in the early trade to ₹579.75 apiece on the BSE. However, SBI shares failed to hold gains and fell from the day’s high to trade nearly a percent lower.

Brokerages maintained their positive stance on SBI stock and expected more upside for the SBI share price in the range of 24% to 32%.Premium
Brokerages maintained their positive stance on SBI stock and expected more upside for the SBI share price in the range of 24% to 32%.

Shares of State Bank of India (SBI), the state-run largest lender in the country, gained over a percent after the bank reported a near three-fold jump in its net profit for the quarter ended June 2023.

SBI share price gained as much as 1.13% in the early trade to 579.75 apiece on the BSE. However, SBI shares failed to hold gains and fell from the day’s high to trade nearly a percent lower.

SBI Q1 net profit jumped 178.25% YoY to 16,884 crore. Its net interest income (NII) in April to June 2023 quarter rose 24.71% YoY, while domestic net interest margin (NIM) increased by 24 bps YoY to 3.47%.

Read here: SBI Q1 results 2023: Net profit jumps 178% to 16,884 crores, NII rises 24.71%. Stock dips 3%

Brokerages maintained their positive stance on SBI stock and expected more upside for the SBI share price in the range of 24% to 32%. Here’s what brokerages said on SBI Q1 results and SBI share price:

Motilal Oswal Financial Services

SBI delivered a mixed quarter with NII missing estimates, led by margin contraction, while higher treasury income drove earnings beat. Business growth remains modest in a seasonally weak quarter and the bank expects to gain healthy traction in the coming quarters. A higher mix of floating loans (MCLR), which could benefit further from re-pricing will continue to support the NII and overall earnings even as the deposit cost could increase, the brokerage firm said.

It estimates SBI to deliver FY25 RoA and RoE of 1.0% and 17.8%. The brokerage reiterated its ‘Buy’ rating with an unchanged target price of 700 per share.

HDFC Securities

SBI posted a mixed bag of results with the highest-ever quarterly earnings again, led by lower opex and credit costs. However, loan growth moderated (+1% QoQ) in addition to a 37 bps QoQ decline in domestic NIMs (3.47%) and lower other income, the brokerage said.

HDFC Securities tweaked its estimates for a lower credit cost, partly offset by softer other income and to watch out for sustainability of cost-to-income trajectory. It maintained ‘Buy’ rating with target price of 750 per share.

Also Read: M&M share price rallies over 3% as Q1 results beat estimates; Should you buy? Here’s what brokerages say

Antique Stock Broking

The brokerage believes a favorable credit quality cycle, strong internal accruals, and excess liquidity would continue to support healthy earnings performance and expects SBI to report RoA of 0.9% and 16% for FY25E. 

It maintained a ‘Buy’ call and cut the target price to 700 per share from 725 earlier. 

Nuvama Institutional Equities

SBI’s core earnings were mixed with a significant miss on NII and soft core fees, offset by lower opex and credit cost. NII declined 4% QoQ, up 25% YoY, missing our estimate by 6% driven by a miss on loan growth and NIM, the brokerage firm said. 

It maintained a ‘Buy; call on the stock, but highlighted that NIM and loan growth remain key monitorables. Even after the margin miss, SBI has delivered core RoA of 1.05%, which is positive, it said.

It revised FY24E and FY25E EPS by 8% and 5%, on higher trading gains, and retained its target price of 705 per share at 1.2x BV FY25E.

At 11:10 am, SBI share price was trading 0.85% lower at 568.35 apiece on the BSE.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 07 Aug 2023, 11:11 AM IST
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