SBI share price near all-time high. HDFC Securities hits new peak in 6 months

State Bank of India or SBI share price closed above Thursday 500 levels each. It caught the attention of market watchers as to whether it would break through its lifetime high of 549 levels per action on NSE. According to HDFC Securities’ report, SBI’s share price to hit a new high is possible in the next couple of quarters as the brokerage sees bank stocks climb to as high as 570 levels per share during this period.

On the valuations of SBI shares; HDFC Securities said: “SBI delivered a strong performance in Q3FY22. The loan book grew strongly and the lower slippage quantum was the main positive surprise. We expect SBI to grow its loan book at a CAGR of 11% while NII and net profit are expected to grow at a CAGR of 11% and 34% respectively in FY21-24E ROAA is expected to improve slightly to 0.9% in FY24E versus 0.5% currently in FY21.”

“The bank sees overall loan growth of around 9% in the near term with a recovery in corporate lending, while personal loan growth could remain at levels of 14-15%. The bank expects a recovery 80 billion in FY22, of which almost 56 billion were recovered in 9MFY22. We continue to monitor steady state impairments and credit costs as the bank gradually re-risks the portfolio. SBI’s valuations remain attractive given the expected average trends in the Bank’s ROE,” the brokerage report added.

Highlighting the improved asset quality of State Bank of India, the brokerage said: “The decline in the number of slippages has helped to improve asset quality; GNPA and NNPA improved to 4.5% and 1.3% from 4.9% and 1.5% in Q2FY22. GNPA The provision coverage ratio improved across all segments, domestic business at 7.1% and retail at 0.9%. The provision coverage ratio in the quarter improved by 120 basis points quarter-on-quarter to 71.2%.

The brokerage added that even on the digital side, SBI has done a great job as it has enabled the bank to get sustainable business. Over the years, it has launched many digital initiatives through which the bank has now been able to capture a significant market share across multiple digital channels, such as 14.46% in POS terminals, 27.73% in debit card spending and 24.72% in mobile banking. number of transactions. Being increasingly digital plays an important role in helping the bank reduce costs, which in turn improves the profitability matrix.

On its suggestion to positional investors regarding SBI’s share price, HDFC Securities said: “We valued SBI on the basis of SoTP to arrive at the benchmark fair value of 520. Our bullish fair value amounts to 570. Investors can buy the shares between 475 to 465 and add more on the dips of Band 420 for the next 2 quarters.”

Warning: The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.

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