Gautam Adani-Hindenburg saga: The Adani group of companies and its major investee companies Life Insurance Corporation (LIC) and State Bank of India (SBI) are under scrutiny as US-based short seller Hindenburg Research reports on the debt position of companies owned by Indian billionaire Gautam Adani. expressed concern. , Despite strong Q3 results, SBI share price has been volatile after the Adani-Hindenburg issue. But, after selling off in Adani group companies in Wednesday’s session (7 out of 10 Adani group companies ended higher in the previous session). This has triggered whether to go for quality banking stocks such as SBI, which has been highly volatile since the outbreak of the Adani-Hindenburg saga.
According to stock market experts, both the fundamental and technical charts of the state Bank of India Or SBI suggests strong upside momentum in the stock over the long term. He said that the slow deposit growth in Q3FY23 will not be a major challenge for SBI and in the long term, he predicted that SBI’s share price could rise 730 each level. SBI share price is around today 545 level on NSE, it means that in the long term around 35 per cent returns can be expected.
Highlighted takeaways from the recently announced Q3 results of State Bank Of IndiaGaurav Jani, Research Analyst, Prabhudas Lilladher said, “The state Bank of India (SBI) sees good quarter with core PPOP 223 billion beat PLE by 5.2%, led by higher NII and other income (ex-Treasury). NIM was ahead at 3.4% (PLE 3.3%). While loan growth was in-line at 3.6% QoQ, it was led by retail and SME Which supported better NIM. The bank sees FY24E loan growth at 14-16%. Slow deposit growth may not be a problem in the near term, as it has excess SLR 3.2 trillion. Asset quality was stable QoQ though the bank made std. provision of buffer assets 42.3 billion.”
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On credit risk of SBI in Adani Group Companies, Prabhudas Lilladher expert said, “While Adani Group’s exposure is 0.88% of total loans, it is below the Large Exposure Framework (LEF) and has not had any issues on loan repayment or servicing till date. Loans are extended against. Which generate cash. Payments relating to loans sanctioned for under construction projects are being made on time. No finance against promoter’s equity. On Opex, salary revision 10 for 36 months would be provided with a -12% increase which would translate to 5.0bn per month.”
Advising positional investors to add SBI shares to their portfolio, Sumeet Bagadia, Executive Director, Choice Broking said, “One can buy and hold SBI shares for short term target. 575 more 590 each level. However, stop loss should be maintained 530 level at the time of taking position in this banking scrip.
Suggesting investors to take long positions in SBI shares, Gaurav Jani of Prabhudas Lilladher said, “We maintain our multiple at 1.6x on Sep 24 core ABV and SOTP based TP (target price). 730. Keep ‘Buy’.”
Disclaimer: The views and recommendations given above are those 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.
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