Buy SBI;target of Rs 190: Axis Securities

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26 Aug, 2025 12:21

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Axis Securities's research report on SBIState Bank of India (SBIN) reported a lackluster quarter marked by decline in margin (8 bps QoQ to 2.9%) and sharp deterioration in asset quality, primarily due to RBIs assessment. As a consequence, SBIN reported a much lower PAT of Rs 11.2 bn (down 62% YoY). Headline asset quality deteriorated with GNPLs up 28% QoQ and ratio up 95 bps QoQ at 5.1%. Slippages were much higher at Rs 207 bn (6.7% vs. 1.9% in Q2FY16), of which ~70% stemmed from asset quality review. Management guided that asset quality pain will continue in the next quarter as well. Advances growth was healthy at 13% YoY, driven by corporate and retail book. We expect 11% loan CAGR over FY15-18.We cut our earnings estimate by 35%/16% for FY16/17 to factorincurrent weak performance. Given near term asset quality pain, we also reduce our target multiple on standalone book to 1x from 1.1x earlier. Consequently, our SOTP-based TP gets revised to Rs 190 (23% upside) from Rs 235 earlier. At CMP of Rs 154, SBIN trades at 0.7x FY17E ABV (adjusting for cost of investments). Maintain BUY.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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