Buy State Bank of India; target of Rs 1015: Motilal Oswal

Motilal Oswal's research report on State Bank of India

SBIN reported 1QFY25 PAT of INR170.4b (up 1% YoY, in line), driven by controlled opex. NII grew 5.7% YoY to INR411.3b (4% miss). NIMs moderated 8bp QoQ to 3.22%. Opex growth was under control at 1% YoY to INR258.4b (9% lower than MOFSLe), resulting in 5% YoY growth in PPoP to INR264.5b (in line). Loan book grew 16% YoY/1% QoQ, while deposits grew 8% YoY (flat QoQ). CASA ratio moderated 41bp QoQ to 40.7%. Fresh slippages stood at INR79.03b in a seasonally weak quarter (annualized slippage rate of 0.84%). Credit cost stood at 0.48% vs. 0.32% in 1QFY24. GNPA ratio improved by 3bp QoQ to 2.2%, while NNPA ratio was flat at 0.6%. PCR ratio declined 61bp QoQ to 74.4%. We broadly maintain our earnings estimates and expect FY26 RoA/RoE of 1.1%/18.2%. Reiterate BUY with a TP of INR1,015 (1.5x FY26E ABV).

Outlook

While the SMA pool was controlled at 12bp of loans. We broadly maintain our earnings estimates and expect FY26 RoA/RoE of 1.1%/18.2%. Reiterate BUY with a TP of INR1015 (1.5x FY26E ABV).