Buy State Bank of India; target of Rs 960: Prabhudas Lilladher

Prabhudas Lilladher is bullish on State Bank of India has recommended buy rating on the stock with a target price of Rs 960 in its research report dated August 04, 2024.

Broker Research

August 05, 2024 / 15:02 IST

BUY

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on State Bank of India

SBI reported a steady quarter as core PPoP beat PLe by 7.2% owing to lower opex, although fees and asset quality were a miss. Credit growth was largely in-line, while deposit growth was soft at 8.2% YoY due to focus on controlling high borrowing cost; strong balance sheet allows deposit accretion to remain muted. Hence, domestic LDR that touched 69% (65% in Q1FY24) can further increase to 70-72%. The bank can achieve 15% loan growth since surplus liquidity is Rs3.7trn and capital can support loan accretion of Rs6-7trn. LCR is strong at 129%, which can absorb the impact of draft RBI circular. Slippages were higher led by agri (seasonal) and unsecured; however, the bank has recovered a chunk of unsecured loans.

Outlook

We maintain multiple at 1.5x on core FY26 ABV but raise SOTP-based TP to Rs960 from Rs910 led by (1) Rs37bn accretion to equity due to new investment norms, (2) upgrade in core earnings by ~2% and (3) increase in subsidiary valuation. Retain ‘BUY’.

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