SBI gains 17% in one month, surpasses LIC to become most valued PSU stock

In the past one month, SBI has rallied 17 per cent, as compared to a 5 per cent gain in the stock price of LIC.

State Bank of India (SBI) has become the most valuable listed public sector undertaking (PSU) as the state-owned lender has surpassed insurance giant--Life Insurance Corporation of India's (LIC) market capitalisation (market-cap).

At 10:56 am, with a market-cap of Rs 4.53 trillion, SBI was the seventh largest company in the overall market-cap ranking of listed companies on the BSE. LIC slipped to number eighth in the list with a market-cap of Rs 4.38 trillion, the BSE data showed.

In the past one month, SBI has rallied 17 per cent, as compared to a 5 per cent gain in LIC's stock. In comparison, the S&P BSE Sensex was up 7.6 per cent during the same period. In the past one week, SBI has gained 4 per cent compared to a 4 per cent decline in LIC's market price.

Since its listing on May 17, 2022, LIC has seen its market-cap erode by Rs 1.15 trillion, while during the same period SBI’s market-cap increased by Rs 36,367 crore, data showed.

Over the last few years, SBI is gradually gaining market share in loans. While PSU Banks, in aggregate, lost 1,130 bps in market share in loans over the last four years, SBI is an outlier with a 90 bps gain to 23 per cent.

SBI has delivered a strong performance amid a challenging macro-environment led by steady business and revenue growth and controlled provisions. The management expects the momentum to remain healthy as utilization levels improve, while retail growth is likely to remain steady.

“A higher mix of floating loans and CASA mix will support margin in a rising interest rate environment. Asset quality performance has been strong, and the outlook remains healthy, with a low restructured book and SMA pool. We estimate credit cost to be controlled at 1 per cent in FY24, enabling 28 per cent earnings CAGR over FY22-24,” said Motilal Oswal Financial Services (MOSL) in a stock update. The brokerage has maintained its ‘buy’ rating on SBI with a target price of Rs 600 per share.

Meanwhile, LIC has maintained its market leadership position in the life insurance industry underpinned by its strong brand, vast distribution, and superior customer-connect despite the advent of a large number of private players.

Analysts at MOSL estimate LIC to deliver around 10 per cent CAGR in NBP during FY22-24E, while the value of new business (VNB) margin is likely to improve to 13.6 per cent on improving product mix and higher profit retention. On July 5, the brokerage  had initiated coverage on LIC with a 'buy' rating and a target price of Rs 830 based on 0.8x FY24E EV.