SBI trades higher for 4th straight day, hits new high ahead of Q2 results

Shares of State Bank of India (SBI) hit a new high of Rs 528.25, up 1 per cent on the BSE in Wednesday’s intra-day trade ahead of its July-September quarter (Q2FY22) results later in the day.

The stock surpassed its previous high of Rs 526.70 touched on October 27, 2021. It was trading higher for the fourth straight day, gaining 5 per cent during the same period. In past one month, SBI has outperformed the market by surging 17 per cent, as compared to 2.5 per cent rise in the S&P BSE Sensex.

SBI appears well-positioned to report a strong uptick in earnings, led by moderation in credit costs, as the bank has strengthened its balance sheet and increased its PCR to around 86 per cent, according to analysts.

Among PSU Banks, SBI remains the best play on a gradual recovery in the Indian economy, with a healthy PCR, Tier I of around 11.3 per cent, strong liability franchise and improved core operating profit. While business trends were impacted by the lockdowns, loan growth is likely to recover gradually over FY22-23E. Even slippages are expected to moderate meaningfully over 2HFY22 as asset quality remains impeccable in the Retail book, analysts at Motilal Oswal Securities said. It maintains ‘buy’ rating on the stock with a target price of Rs 600 per share.

For SBI, net interest income (NII) is seen flat year on year (YoY) at Rs 28,000 crore, with loan growth expected to improve 8 per cent YoY to Rs 25.8 trillion and 9.5 per cent YoY growth in deposits is estimated, ICICI Securities said.

The Bank’s non-interest income seen improving to Rs 11,000 crore up from Rs 8,500 crore in Q1FY21, led by higher fee income due to unlock. Net interest margins (NIMs) are seen to be stable with expectations of firming up. “We factor in normalised slippages and overall provisions of Rs 9,200 crore vs. Rs 8,920 crore quarter on quarter. Hence, net profit is likely to grow to Rs 6,854 crore, rising 50 per cent YoY,” the brokerage firm said in a note. CLICK HERE FOR MORE DETAILS