Buy State Bank of India; target of Rs 975: KR Choksey

KR Choksey's research report on State Bank of India

SBIN earnings outperformed our expectations, driven by a sharp fall in operating expenses and higher MTM gains. Net Interest Income (NII) for Q4FY24 increased by 3.1% YoY (+4.6% QoQ) to INR 416,552 Mn. NII was majorly in line with our estimates, with a 1.4% deviation. Pre-Provisioning Operating Profits (PPOP) grew by 16.8% YoY (+41.4% QoQ) to INR 287,477 Mn. SBIN registered a net profit of INR 206,985 Mn in Q4FY24. This represents a growth of 28.9% YoY (+125.9% QoQ). However, excluding the exceptional expense, the quarter's growth stood at 27.3% QoQ. The net profit has outperformed our estimates, led by the robust operating performance.

Outlook

We raised our P/ABV multiple from 1.3x to 1.5x, driven by strong financial performance, an optimistic business outlook, and improved asset quality. We revise our target price to INR 975 per share (earlier INR 795), with an upside of 19.2%. We maintain our "BUY" rating on the shares of SBIN.