Buy State Bank of India; target of Rs 565: LKP Research

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

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26 Aug, 2025 12:21

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LKP Research's research report on State Bank of India

State Bank of India (SBIN) has delivered a stable result on operating and assets quality front. Reported gross slippages stood at ₹28bn v/s ₹23bn in the previous quarter. Its reported GNPA (3.97% v/s 4.5% in 3QFY22) and NNPA (0.97% v/s 1.34% in 3QFY22) improved noticeably along with stable PCR (incl. AUCA) of 90%. Furthermore SMA2 (2bps v/s 6bps) decreased considerably. The bank has witnessed better than expected advance growth (11.6% YoY & 6% QoQ) led by wholesale credit growth and stable deposit growth (10% YoY & 5.3% QoQ) sequentially with better liquidity position. Moreover the bank has reported PAT of ₹91bn (v/s ₹84bn in 3QFY22) on back of stable NII growth (15.3% YOY and Domestic NIMs: 3.36%) along with steady operating expenses. The 4QFY22 calculated ROA and ROE stood at 0.74% and 13% respectively. Management reiterated the target ROE of 15% in mid run.

Outlook

The bank has established total standard asset and contingent provision of ~₹306bn (112bps of net advances) as on 4QFY22. With improving asset quality, ample contingent buffer and strong growth outlook, we believe the ROE target of 15% is achievable in mid run. We recommend BUY with target price of ₹565.

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