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Shares of State Bank of India (SBI), India’s largest public sector bank, in terms of assets, deposits, branches, number of customers, and employees, have delivered minor returns this year.
The stock has risen 5% in 2023 and is up 4.56% in a year. However, the banking stock has risen nearly 14% in a month, signalling a minor bullish momentum in the large-cap scrip.
Analysts tracking the stock at several brokerages remain largely positive on the counter and see more steam left in it. Axis Securities, SMC Global and Motilal Oswal Securities have SBI among their top picks for next year.
Among PSU banks, SBI remains the best play on the gradual recovery of the Indian economy on account of its healthy PCR, robust capitalisation, strong liability franchise, and improved asset quality outlook, said Axis Securities in its research note titled ‘New Year Picks 2024.’
The brokerage believes SBI remains well poised to deliver return on asset and return on equity of 1% and 16%, respectively, over FY24-26E, supported by stable credit costs and steady cost ratios. Axis Securities has recommended a ‘buy’ on the counter with a target price of ₹800 per share, implying a significant upside of 25% from the current market levels.
According to SMC Global, SBI has exhibited healthy performance on various parameters, with some parameters showing way better than industry performance and some on par with industry standard.
The PSU bank’s strong underwriting practices have led to significant improvement in the asset quality of the bank.
The management of the bank plans to double its home loan portfolio in the next five years. To achieve its target of doubling the home loan book, the bank is strengthening its underwriting capability to improve delivery, SMC Global said.
Thus, the brokerage expects the SBI stock to see a price target of ₹791 in 8-10 months’ time frame on a two-year average P/BV (price-book value) of 1.73 times and FY25 BVPS (book value per share) of ₹457.07.
The PSU bank stock also finds itself in Motilal Oswal’s list of stock picks next year. This brokerage, however, sees a lower target of ₹700 on the stock.
On Friday (December 29), the scrip settled 1.49% lower at ₹641.70 apiece on the NSE
