Buy State Bank of India; target of Rs 700: Emkay Global Financial

Emkay Global Financial is bullish on State Bank of India has recommended buy rating on the stock with a target price of Rs 700 in its research report dated August 05, 2023.

Broker Research

August 09, 2023 / 14:13 IST

Buy

26 Aug, 2025 12:21

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Emkay Global Financial's research report on State Bank of India

Notwithstanding the slower growth and sharp margin contraction, SBI continued to deliver a strong PAT beat, at Rs168bn (Emkay: Rs149bn)/1.2% RoA in 1Q, on robust treasury gains, lower overheads and LLP. Though NIM contraction for SBI in 1Q was relatively higher (27bps QoQ to 3.3%) vs private peers (12-20bps), we believe most banks on cumulative basis would in near term will exhibit similar margin contraction. Bank guides for 13-14% growth in FY24E led by Retail which, along with better LDR/consumption of on-balancesheet liquidity, should help sustain FY24E margin at 3.4-3.5% (reported). Despite the lower CET 1 at 10.2%, Bank believes that it can fund current growth via internal accruals. Factoring-in the 1Q beat, we raise our earnings by 2-3% for FY24-26E and expect the bank to deliver a healthy 1-1.1% RoA/17-19% RoE without any capital raise.

Outlook

We retain BUY on the stock with TP of Rs700/share, valuing the standalone bank at 1.2x Jun-25E ABV and subs/investments at Rs185/share.

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