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Shares of State Bank of India (SBI) surged nearly 4% to record high of ₹622 apiece on the BSE in Monday’s opening deals after the lender reported a strong earnings by witnessing the highest-ever quarterly profit at ₹13,265 crore, up 74 % year-on-year (YoY), for the September quarter of FY23, buoyed by robust loan sales, higher interest income and lower provisions. 

The country’s biggest bank has revised its credit growth outlook to 14-16% for the current financial year driven by strong revival in capex cycle and corporates replacing overseas credit with rupee loans, chairman Dinesh Khara said, as it is seeing demand from infrastructure, renewable power, oil and marketing companies, and services sectors.. The bank had earlier projected FY23 credit growth at 11-12%.

Brokerages on SBI shares post strong Q2

“SBI’s share price has surged over 2x in the past five years. We believe SBI with its humongous size has reported consistently upbeat performance with this quarter seeing above par growth in earnings and return ratios. The stock, long due for re-rating, should see a strong positive reaction. Hence, we retain our Buy rating on the stock,” said ICICI Securities with a target price of ₹700 per share.

“At our new target price of ₹715 (up from ₹595), we are upgrading SBI to ‘BUY’ from ‘HOLD’. We expect the stock to re-rate driven by margin expansion, strong loan growth and low credit cost sustaining over the next few quarters. We expect an RoA of 0.9% and an RoE of 15% in FY24E even after factoring in the new wage bill. We expect SBI to raise fresh equity in next 12 months,” said brokerage Edelweiss.

“Company disclosures and our channel checks give us confidence on stable asset quality in foreign loans and unsecured personal loans. Overall, we believe SBI is better placed vs most private banks in current liquidity/asset cycle. SBI shares remain amongst our top picks (Axis/Federal being others) with target price to ₹715 ( ₹675 earlier),” said another brokerage Ambit.

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