Buy State Bank of India; target of Rs 353: Reliance Sec

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26 Aug, 2025 12:21

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Reliance Securities report on State Bank of IndiaState Bank of India’s (SBI) 2Q net profit stood higher than our and street estimates led by the higher treasury income along with one time gain of Rs 4.9bn on repatriation of income from foreign operations. Treasury income grew by 230% yoy and 71.3% qoq to Rs 15bn as the bank took advantage of decline yield in GSec market. Fresh slippages continue to trend down as the bank reported incremental slippages of Rs 58.8bn (slippage ratio of 1.8%) v/s Rs 73.2bn (slippage ratio of 2.3%) in 1QFY16 and Rs 77bn (slippage ratio of 2.6%) in 2QFY15. Loan book rose 10.5% yoy and 4.5% qoq due to strong growth in large corporate, retail and overseas segments. On the other hand deposit grew by 10.9% yoy and 1.3% qoq led by the strong growth in retail term and CASA deposits. We continue to maintain BUY with a revised Target Price of Rs 353.Outlook and ValuationAmidst the challenging macroeconomic regime, State Bank of India has been delivering reasonable operating and asset quality performances. Further, SBI is well placed to capitalise on the expected improvement in the economic cycle. Higher capital infusion commitment by GOI is also a long-term positive for the bank. Hence, we maintain our BUY recommendation with SOTP-based Target Price of Rs 353, wherein the standalone bank has been valued at 1.6x FY17E adj. BV and the subsidiaries are valued at Rs 35/share after deducting holding company discount of 20%, says Reliance research report.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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