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 reported higher loss on back of high slippages of Rs336.7bn, leading to interest income reversals & provisioning. Bulk of the slippages were from corporate and with 60% coming from the stressed pool (5/25, SDR, S4A & Restructured). Key positives were (i) NIMs held up despite interest reversals and (ii) despite taking RBI dispensation of 40% provisioning on NCLT List-1, overall PCR & NCLT List-1 PCR was at +50%. Bank's stressed asset pool is now 1.3% of loans (down from 2.8% in Q3) and some large recoveries from NCLT a/c will help improve asset quality but keep provisioning high based on ageing leading to improving PCR.

Outlook

Retain BUY with revised TP of Rs349 based on 1.5x Mar-20 ABV & SOTP.

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