State Bank of India (SBI) witnessed a strong rally of nearly 3% today after Citi upgraded the stock from Sell to Buy, raising the target price from ₹720 to ₹830. The upgrade highlights SBI’s sharper focus on net interest margins (NIM), sustained growth, and strong asset quality.
Key Takeaways from Citi’s Report:
NIM Protection: SBI’s management has outlined multiple cost-optimization strategies, with relatively lower external benchmark lending rate (EBLR) loans (~28%). MCLR hike repricing should safeguard NIMs, which are expected to remain between 2.9%-3.0% over FY25-27.
Growth Visibility: The bank’s credit growth is supported by strong demand in Xpress Credit, a robust corporate loan pipeline, and an accelerated home loan (HL) rollout.
Stable Asset Quality: Unsecured retail slippages are contained at 0.5%, and the SMA-2 pool remains under control. Credit costs are expected to stay below 50bps.
Capital Boost: The restoration of risk weights on NBFC lending will enhance SBI’s CET-1 ratio by 25-30bps, easing concerns about equity dilution.
As per Citi, SBI’s stock has corrected 18% in the last three months, underperforming the Bank Nifty by 10-12%. However, with a valuation at just 0.85x book value and robust earnings growth of 13-14% expected, SBI remains an attractive bet with a 1% RoA and 15% RoE.
State Bank of India (SBI) shares opened at ₹693.00, reaching a high of ₹714.65 and a low of ₹692.10. The stock is currently trading close to its 52-week low of ₹680.00, while its 52-week high stands at ₹912.00.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Business Upturn is not liable for any losses arising from the use of this information.
