Late Ashwini Gujral picks SBI stock as a good bet amid Adani saga

just a few days ago they talked about Adani The saga that has currently rocked the Indian market.

Through my Youtube channel, Gujral Picked a stock that has exposure to the Adani group and has been impacted since the US short seller reported in late January this year.

On 15 February 2023, amid the Adani saga, Gujral said that, according to him, a stock to be affected in collateral damage would be state Bank of India (State Bank of India).

He told that along with SBI 27,000 crore exposure to Adani Group, which is less than 1%, dropped the least 100, while the one year profit of the bank is more than the amount at risk. The bank also has collateral.

“Suppose, this collateral turns to zero, yet SBI has a stable margin of safety at this point of time,” he said.

He pointed out the key factors for investing in SBI. If investors are buying in the cash market, he said, SBI has the strength of government ownership and will not go down. On 15th February he suggested stop loss 495 on SBI.

On February 15, SBI stock closed at Rs. 540 on NSE at Rs.

Last time SBI share price stopped The 600 mark was on January 24, the day Hindenburg released its report, which led to the onset of massive destruction in Adani Group-backed stocks. Like LIC, SBI also bore the brunt of the Adani saga because of its exposure to the Gautam Adani-backed group.

Between January 24 and February 27, SBI will have the lowest market price. A price of Rs 499.35 was seen on February 1 and the stock remained up from here onwards. 500 each level but traded widely volatile.

Later on February 3, SBI said that its total exposure to the Adani group is approx. 27,000 crore – which is 0.88% of its total loan book.

On February 27, SBI closed at a share price of 527.50 on the NSE, up 1.24%. SBI is among the top 10 most valuable firms. In a little over a month of the Adani-Hindenburg row, SBI share price has fallen nearly 14% between January 24 and February 27. But the stock has climbed nearly 6% since its February 1, 2023, low since the Hindenburg Report.

Moving forward, in the F&O segment, Gujral told those who are looking for short calls in SBI — 540 calls in March expiry are profitable.

In the options chain, F&O contracts for March 2023 expiry, SBI is trading at Rs. 9.45 on Monday for the strike price of 540. The end date for March F&O has been fixed as March 29, 2023.

If Bank Nifty crosses 41,800 and goes towards 42,500, then investors can get good momentum in SBI.

“As soon as the market goes up, the sentiment automatically recovers. So those who are scared about what will happen in Adani, when the market starts going up 100 or 150 points, forget these things And start moving forward.” Ahead.”

However, Gujral said that SBI will not do well, but with respect to valuations, there is no downside in the bank, so one can bet in this bank. Because, Adani’s business is not much in SBI. Also, there is less chance of stock price manipulation in SBI due to Adani saga.

Gujral had written several books where he provided a guide to investors on how to trade in market related instruments like equity, derivatives, futures and options.

Earlier this month, CreditSights, a division of Fitch Ratings, said SBI’s overall credit exposure to the Adani group is quite manageable, given its adequate general provisioning reserves buffer of Rs 338 billion, or 1% of net loans.

CreditSites highlighted that SBI has provision reserves of around 338 billion rupees ($4.08 billion) or about 1% of net loans. It added that SBI may also generate pre-provisioning operating profit or income taking into account future bad loan provisions.

In Q3FY23, SBI posts highest ever quarterly net profit 14,205 crore 68.47% YoY. The lender’s Net Interest Income (NII) witnessed a strong growth of 24.31% YoY 30,687 crore driven by better margins. Net Interest Margin (NIM) increased by 29 bps YoY and 14 bps QoQ to 3.69%.

SBI’s asset quality further improved in Q3FY23. As on December 31, 2023, the bank’s gross NPA ratio contracted by 136 bps YoY to 3.14%, while the net NPA ratio declined by 57 bps to 0.77%. Provision coverage ratio (PCR) improved by 490 bps YoY to 76.12%.

Coming to the stock price outlook in the cash market, most analysts are optimistic about SBI post Q3 numbers.

Shantanu Chakraborty, Analyst – Banking & Financial, BNP Paribas India maintains ‘Buy’ rating on SBI, setting a target price 740 each. He added, “In contact with Adani Group, the management clarified that the total exposure is c0.88% of the advances. All loans are secured by project assets, with the majority being operational assets/to generate cash flows for completed projects.” has been introduced.”

Furthermore, while maintaining a ‘Buy’ rating on SBI, Gaurav Jani – Research Analyst, Prabhudas Lilladher had earlier said, “While Adani Group’s exposure stands at 0.88% of total loans, it is below the Large Exposure Framework (LEF) and There have been none till date. Issues on loan repayment or servicing. Loans are given against operating businesses and assets that generate cash. Payments relating to loans sanctioned for under-construction projects are being made on time. Promoter’s equity No finance has been provided against. Opex will be provided for 36 months with 10-12% increase on pay revision which will come to Rs 5.0 billion per month.”

Prabhudas analyst set target price 730 on SBI Rs.

Watch full video of Ashwani Gujral’s opinion on SBI amid Adani saga here:

Disclaimer: The views and recommendations given above are of individual analysts or broking companies and not of Mint. We advise investors to do due diligence with certified experts before making any investment decision.