Buy State Bank of India; target of Rs 1010: KR Choksey

Buy

KR Choksey's research report on State Bank of India

Net Interest Income (NII) for Q1FY25 increased by 5.7% YoY (-1.3% QoQ) to INR 411,255 Mn. NIMs stood at 3.2% in Q1FY25 vs. 3.3% in Q1FY24 (vs. 3.3% in Q4FY24). NII was a miss of 5.1% as against our estimates. Pre-Provisioning Operating Profits (PPOP) grew by 4.6% YoY (-8.0% QoQ) to INR 264,486 Mn in Q1FY25. The QoQ decline was on account of lower non-interest income. SBIN registered a net profit of INR 170,352 Mn in Q1FY25 (+0.9% YoY/ -17.7% QoQ). The net profit has underperformed our estimates by 5.2%, on account of lower operating performance and slightly higher provisions. We increased our EPS by 3.1%/ 2.8% for FY25E/ FY26E, respectively, assuming lower credit costs compared to our previous estimates.

Outlook

We assign a P/ABV multiple of 1.5x to the adj. book value of FY26E and revise our target price to INR 1,010 per share (earlier INR 975), with an upside of 24.4%. We maintain our "BUY" rating on the shares of SBIN.

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State Bank of India - 070824 - kr