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

SBI shares have yielded a return of 6.33% in CY23 so far, falling short when compared to the Nifty Bank index which has delivered an 11.66% gain during the same period.

A Ksheerasagar
Published18 Dec 2023, 01:00 PM IST
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The bank's net profit for the quarter jumped by 8% to reach  <span class='webrupee'>₹</span>14,330 crore, up from  <span class='webrupee'>₹</span>13,264.5 crore in Q2 FY23. The bank's net interest income grew by 12.3% to  <span class='webrupee'>₹</span>39,500 crore from  <span class='webrupee'>₹</span>35,183.4 crore in the year-ago quarter.
The bank’s net profit for the quarter jumped by 8% to reach ₹14,330 crore, up from ₹13,264.5 crore in Q2 FY23. The bank’s net interest income grew by 12.3% to ₹39,500 crore from ₹35,183.4 crore in the year-ago quarter.(REUTERS)

Shares of State Bank of India (SBI), the country's largest lender, rose for the second consecutive session in today's trade, reaching a new all-time high of 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.

SBI yearly performance

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?

Brokerage view

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.

The asset quality performance remains strong with consistent improvements in headline asset quality ratios, while the restructured book remains under control at 0.6%, along with a lower SMA pool at 12 basis points of loans. The bank will deliver FY25E RoA/RoE of 1.1%–18.3%, as per the brokerage estimates.

Also Read: ICICI Direct picks IndusInd Bank as a 'High Conviction Idea' for December; here's why

Meanwhile, on December 13, the bank said it will sign a 70-million-euro (about 630 crore) Line of Credit (LoC) with the German Development Bank KfW for promoting solar projects in the country. The LoC is aimed at supporting solar photovoltaic (PV) projects in India, the bank said.

Regarding financials, the bank delivered another strong performance for the September quarter, exceeding the Street estimates. The bank's net profit for the quarter jumped by 8% to reach 14,330 crore, up from 13,264.5 crore in Q2 FY23. The bank's net interest income grew by 12.3% to 39,500 crore from 35,183.4 crore in the year-ago quarter.

At 12:15 PM, the stock was trading with a gain of 0.40% at 651.45 apiece.

 

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.yearky view 

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First Published:18 Dec 2023, 01:00 PM IST
HomeMarketsStock MarketsSBI shares extend gains for second day, hit new all-time high; should you buy?

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