State Bank of India (SBI) share price jumped nearly 3 percent on October 9 to touch an intraday high of Rs 804.35 per share on the NSE, after a Nomura report set a price target with 25 percent upside potential.
Analysts at the global brokerage Nomura have a 'Buy' call on SBI stock with a share price target of Rs 980 per share. Around noon today, SBI shares were trading at Rs 797.45 apiece on the NSE, up 2.05 percent. The stock has gained over 4 percent in the last two days.
Nomura, in its latest report, said SBI is well-placed to deliver on asset quality given its lower exposure to ‘problematic’ segments and a strong retail underwriting track record.
"SBI has the lowest domestic LDR (loan-to-deposit ratio) among large banks (with arguably one of the strongest deposit franchises), and hence, faces no imminent supply-led pressures on growth," it noted.
Nomura analysts said that SBI’s asset quality may remain steady, given that "SBI’s unsecured personal loans are predominantly exposed to salaried government employees and have held up well through cycles. The outlook for corporate credit quality remains strong, although some near-term blips are possible."
On possible RBI rate cuts in the near future, the report said that SBI should see NIM pressures of 12bps from a potential 50bps rate cut. "However, the impact could be even lower if we account for recent MCLR rate hikes taken by SBI (+30bps in 1HFY25), in our view," it added. Today, RBI left repo rate unchanged at 6.5 percent, but paved the way for monetary policy easing by softening the stance to 'neutral'.
SBI shares have delivered nearly 25 percent returns in 2024 so far, outpacing the benchmark Sensex, which has risen by 13.38 percent.
State-owned SBI enjoys a lion's share of the total deposits and credit in the banking sector. Along with consumer and commercial lending, SBI has expanded its business to include insurance (life and general), asset management, factoring, etc., through various associate and subsidiary companies.
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