Buy State Bank of India; target of Rs 530: Motilal Oswal
Motilal Oswal is bullish on State Bank of India recommended buy rating on the stock with a target price of Rs 530 in its research report dated Jun 08, 2021.
June 09, 2021 / 02:52 PM IST
Motilal Oswal's research report on State Bank of India
State Bank of India (SBIN)’s Annual Report highlights “Resilience,” ”People,” and “Technology” as the key theme, with the endeavor to continuously strengthen the balance sheet and improve return ratios. The bank has continued to invest in cutting-edge technology to maintain its position among the most digitally savvy banks. The focus has remained on building a superior loan book, while maintaining strong underwriting – as evident from the robust asset quality across retail segments. This is primarily attributable to >95% of unsecured credit being offered to government/PSU employees and ~41% of corporate loans being offered to PSUs / govt. undertakings.
Despite a challenging year, SBIN has continued to report higher improvement in asset quality v/s private peers, with PCR improving to 71% (85% on the corporate book). Controlled restructuring (0.7%) and a low SMA book (0.5%) provide further comfort on asset quality and would drive a sustained reduction in credit cost. Maintain BUY, with TP of INR530 (1.1x FY23E ABV + INR188 from subs).
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