Sharekhan's research report on State Bank of India
Earnings were above estimate on lower credit cost, resulting in RoA/RoE at 1.0%/15.8%. However, core operating performance lagged estimates due to weak NII (driven by lower NIMs) and higher opex sequentially. Asset quality was stable, led by lower slippages. Loan growth was healthy at 14% y-o-y (higher than system). Deposit grew by 10% y-o-y lagged system growth. Stock trades at 1.1x/0.9x/0.8x its FY2025E/FY2026E/FY2027E core BV estimates.
Outlook
We maintain a Buy with a revised PT of Rs. 980 as there are no concerns on asset quality and expect the bank to sustain RoA/RoE at ~1%/15% in the near to medium term. Risk reward is favourable.
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