Buy State Bank of India; target of Rs 455: HDFC Securities

HDFC Securities is bullish on State Bank of India has recommended buy rating on the stock with a target price of Rs 455 in its research report dated February 05, 2021.

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February 10, 2021 / 19:49 IST

26 Aug, 2025 12:21

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HDFC Securities' research report on State Bank of India

SBIN’s 3Q earnings were significantly ahead of our estimates on the back of (1) better-than-expected margins and (2) lower-than-expected provisions. The biggest surprise, however, was SBIN’s performance on asset quality metrics with pro forma slippages (94bps annualised) and restructuring requests (0.8% of loans) coming in well within management guidance. With the back-book sufficiently provisioned against (pro forma PCR at 67%) and potential buildup in stress in line with the best-in-class private sector banks (evidence of comparable quality of underwriting in retail and SME), we see potential for a meaningful narrowing of SBIN’s valuation discount to its private bank peers. We continue to be conservative on accretion to stress (possible lagged impact) and loan loss provisions (on both pools of potential stress).

Outlook

We raise FY21-23 earnings by 12-27% and reiterate BUY with a revised target price of INR455.

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