So far in 2023, State Bank of India (SBI), the largest public sector bank in terms of assets, deposits, branches, number of customers, and employees, has generated a 4% return, trailing the BSE Bankex's 10% rise and the BSE Sensex's 17% rally. However, SBI is currently one of a few brokerages' top selections for 2024. Among them were Axis Securities, SMC Global, and Motilal Oswal Securities.
According to Axis Securities, among PSU banks, SBI remains the strongest option on the Indian economy's steady recovery because to its solid PCR, robust capitalisation, strong liability franchise, and improved asset quality outlook. This firm believes SBI is well-positioned to produce a 1% return on asset and a 16% return on equity during FY24-26E, supported by stable credit costs and cost ratios.
"We recommend a Buy on the stock with a target price of Rs 800 per share, implying a significant upside of 25 per cent from CMP," the brokerage said in a statement. According to SMC Global, the PSU bank has demonstrated good performance across a range of criteria, with certain parameters outperforming the industry and others performing in line with it.
As per SBI, its robust underwriting standards have resulted in a considerable improvement in the bank's asset quality.
To recap, SBI management intends to more than treble its home loan portfolio over the next five years. To meet its goal of expanding its home loan book, the bank is enhancing its underwriting capabilities in order to increase delivery.
SMC Global has set an 8-10 month price target of Rs 791 on the company, based on a two-year average P/BV of 1.73 times and FY25 BVPS (book value per share) of Rs 457.07.
SBI is also in Motilal Oswal's list of 2024 stock choices. This firm, on the other hand, has a lower target of Rs 700 on the stock. In the meantime, InCred Equities has set a target price of Rs 750 on SBI. Its bull-case valuation, which assumes a 10% increase in earnings and a higher multiple of 1.4 times, suggests an SBI target price of Rs 850.
