SBI, Axis Bank, Larsen & Toubro among Sensex 30 hit fresh all-time highs

In the past one month, SBI up 3% has underperformed the PSU Bank index, which surged 21% during the period.

State Bank of India (SBI) and Axis Bank from banking space, and Larsen & Toubro (L&T) from capital goods sector, were among three stocks from the S&P BSE Sensex to hit new all-time highs on the BSE in Wednesday’s intra-day trade. At 10:30 AM; these stocks traded higher by up to 1 per cent, as compared to 0.32 per cent rise in the benchmark index.

Among individual stocks, SBI hit a new high of Rs 625.85, surpassing its previous high of Rs 622.90 touched on November 7. In past one month, the stock of largest PSU bank (up 3 per cent), has underperformed its peers, which rallied more than 15 per cent during the period. While, in past one month, the PSU Bank index has surged 21 per cent, as compared to 2 per cent rise in the benchmark indices.

The rating agency ICRA believes SBI’s incremental capital requirements remain limited for the targeted growth, while maintaining a buffer of at least 100 basis points (bps) over the regulatory ratios. Moreover, if required, the bank’s ability to raise capital from the markets remains strong.

The Stable outlook on the ratings factors in ICRA’s expectations that SBI remains well-placed to absorb any unanticipated asset quality shocks through its operating profit, given the high provision coverage on legacy accounts. Further, ICRA continues to expect that SBI will benefit from its dominant position in the Indian banking industry, strong ability to raise capital, robust resource profile and sovereign ownership, the rating agency said in rationale.

Analyst at ICICI Securities value SBI at ~1.3x FY24E ABV and subsidiaries at ~Rs 192/share and arrive at a target price of Rs 700. “Consistently upbeat performance with healthy credit growth, steady margins at ~3 per cent and lower slippages with adequate provision buffer to earnings trajectory and thereby valuations,” the brokerage firm said in Q2FY23 earnings wrap.

As regards to Axis Bank, analysts have a ‘buy’ rating on the bank’s stock with a target price of Rs 1,000 per share valued at 2.3x its financial year 2023-24 estimates adjusted book value (ABV). Focus on risk adjusted business growth and improving margin trajectory is seen aiding return ratios with sustainability of performance to drive valuation ahead, the brokerage firm said. In past one month, the stock has rallied 11 per cent.

L&T hit a new high of Rs 2,209.80, surpassing its previous high of Rs 2,193.45 touched on December 9. In past one month, the stock has gained 10 per cent on strong order prospects.

L&T, the engineering behemoth, with its decades of experience in engineering & construction and robust track record is well poised to be the key beneficiary of capex upcycle driven by investments in both public and private sectors, according to analysts.

With a better conversion ratio expected on Rs 6.3 trillion order prospects in H2 FY23, management also retained its 12-15% order inflow growth guidance. Analysts at Anand Rathi Share and Stock Brokers expect the sustained double-digit growth momentum, focus on cash-flow generation & execution and less exposure to non-core assets to augment return ratios.