SBI stock trades at 4-month high; gains 14% in 2 weeks on strong outlook

SBI has demonstrated its strength in the last few quarters both on core operating performance and asset quality, while, management remains confident on growth, maintenance of margins and steady RoA.

Shares of State Bank of India (SBI) hit an over four-month high at Rs 871, gaining 1 per cent on the BSE in Thursday’s intra-day trade on strong outlook. The stock of the state-owned lender was trading higher for the third straight day, rising 4 per cent during the period. In the past two weeks, SBI has rallied 14 per cent from a level of Rs 762. It was quoting at its highest level since August 1, 2024. It had hit a 52-week high of Rs 912.10 on June 6.

 

SBI is a public sector bank and also the largest bank in India with a balance sheet size of over ~ Rs 63 trillion. SBI has showcased strength in retail portfolios, best operating metrics in the PSU banking space. Large subsidiaries, strong outlook adds value.

 

 

SBI has demonstrated its strength in the last few quarters both on core operating performance and asset quality. Management remains confident on growth, maintenance of margins and steady RoA. Sustained balance sheet growth (13-15 per cent), strong liabilities franchise and prudent asset quality is expected to aid RoA at ~1 per cent in FY25- 26E.

 

According to technical analysts at ICICI Securities, Nifty PSU bank index witnessed a faster pace of retracement wherein it retraced 12 weeks consolidation in just 3 weeks, highlighting structural turnaround. Within this space,  SBI looks lucrative as stock is on the verge of resolving out of strong base formation above 200 days EMA (in past 2 months on 4 occasions supportive efforts from 200 days EMA), highlighting buying demand at elevated support base that augurs well for next leg of up move.

 

Meanwhile, analysts at Axis Securities said they continue to remain positive on the stock with a target price of Rs 1,040 per share. SBI remains well poised to deliver a strong earnings growth of 12 per cent compound annual growth rate (CAGR) over FY24-27E alongside maintaining RoA of 1-1.1 per cent driven by strong growth while maintaining a comfortable loan to deposit (LDR), focused efforts to improve fee income profile, contained Opex ratios and steady credit costs and strong asset quality, the brokerage firm said.  SBI is an attractive play in the fast-growing Indian economy, with a healthy balance sheet and strong liability franchise. In recent times, the results indicate its inherent business strength and the bank have worked on improving operating metrics along with strong sector tailwinds. Sharekhan believes credit growth would be broad-based, driven by retail, SME, and corporate segments. The brokerage firm believes that improved performance should be sustained over the medium term. Overall asset quality outlook is stable.