SBI stock is trading near 52-week high. Motilal Oswal is tagged ‘buy’

“This has led to a sustained change in operating performance and will drive the return ratio to the long-term average and possibly higher. Amid a challenging macro-environment led by stable business and revenue growth and controlled provisions, SBI has delivered a strong performance,” said Motilal Oswal, a domestic brokerage and research firm.

There is a buy tag on the brokerage SBI shares with a target price of 600 per. The bank stock, which is currently trading near its 52-week high, is up over 8% so far in 2022 (YTD), compared to a 6% fall in the benchmark BSE Sensex.

The lender’s management expects momentum to remain healthy as utilization levels improve, while retail growth is likely to remain stable. According to the brokerage, a higher mix of floating loans and CASA mix will support margins in an interest rate environment.

“Asset quality performance has been strong, and the outlook remains healthy with a lower restructured book and SMA pool. We expect credit cost to be contained at 1% in FY24, from 28 in FY2012-24. % Earnings will enable CAGR. We expect SBI to deliver a RoA/RoE of 0.9%/16.7% in FY24. SBI continues to be our top buy in this segment,” Motilal Oswal said.

Over the years, the public sector bank has been gradually gaining market share in loans. The brokerage said that PSU banks have lost an overall 1,130 bp in market share in loans in the last four years, while SBI is up 90 bp to 23%.

“Within retail loans, Express Credit is the fastest growing segment and offers a long runway of growth. While we anticipate credit growth to remain at 13% CAGR in FY22-24, we are looking at SBI’s market share. We are quite confident to move forward from, and improve its debt market share,” the note said.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.

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