Sharekhan's research report on State Bank of India
SBI is reasonably confident to deliver ~15% loan growth and RoE of 16-18% in the near to medium term. The bank is well positioned to manage sectoral headwinds, given surplus liquidity and comfortable LDR at ~75%, while the overall impact on margins would not be significant if the rate cuts cycle starts as it has levers to restrict the impact. The asset quality is holding up well and the portfolio is still not showing worrying signs, including unsecured retail loans despite the slowdown in growth. Normalisation of credit costs will be gradual, keeping credit cost still far lower than the long-term averages.
Outlook
The stock trades at 1.3x/1.1x/0.9x its FY2025E/FY2026E/FY2027E core BV estimates. We maintain BUY with a revised PT of Rs. 1,050. The stock remains our top pick in the PSU bank basket.
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