Buy State Bank of India target of Rs 1025 Prabhudas Lilladher

Prabhudas Lilladher's research report on State Bank of India

SBI reported a stable quarter as core PPoP was ~1% ahead of PLe owing to better fees. TWO recovery was higher at Rs23.4bn, which is likely to sustain as per the bank. While loan growth at 15% YoY was broad based, it was a tad lower due to 1.2% QoQ decline in ‘Xpress’ loans as i) repayments outpaced disbursals led by slow demand and ii) process automation affected credit flow. However, ‘Xpress’ growth could touch double digits by FY25 end, as the bank has seen a healthy pick-up in volumes sinceOct’24. While the bank has guided for loan growth of 14-16% for FY25, we estimate it at 13% since system credit growth is slowing. Asset quality was steady as net slippages were controlled. Although SMA-1 spiked QoQ due to slippages from a government account of Rs90bn, it has been regularized. The stock is currently trading at 1.1x.

Outlook

We maintain multiple of 1.5x, but raise SOTP-based TP to Rs1,025 from Rs960 as we roll forward to Sep’26 ABV. Retain ‘BUY’.