Buy State Bank of India; target of Rs 349: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on State Bank of India

SBI continued to report losses with Rs48.8bn in Q1FY19 (PLe: Rs12.3bn profit) mainly on (i) Higher provisions on both NPAs & MTM hit in investments (ii) higher treasury losses bought down other income and (iii) higher wage provisions and gratuity charge. Positive was better NII growth of 24% YoY mainly on large interest recovery from NCLT case but adjusted on that NII was up 12% YoY mainly on control on cost of funds rise. Asset quality saw marginal improvement with higher upgrades/recoveries and in-line slippages. Slippages outside the corporate book worry us but Bank's lumpy standard stressed asset pool is now only 1.2% of loans (down from 1.4% in Q4) and few large resolutions from NCLT and outside NCLT would help asset quality in FY19, while credit cost in interim will remain high especially on the cases under SAMDHAN scheme but will enhance PCR further.

Outlook

Retain BUY with TP of Rs348 (unchanged) based on 1.5x Mar-20 ABV & SOTP.

For all recommendations report, click here

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