Rs 30,656 Cr Made In 30 Minutes; PSU Stock SBI Up 4% On $3 Bn Fundraising Plan, Board Meet On June 11; BUY?

In less than 30 minutes of the opening bell of Thursday's trade, India's largest PSU Bank, SBI witnessed a huge buying momentum. State Bank of India (SBI) rallied by at least 4.35% and its market value jumped by a whopping Rs 30,656 crore. The uptrend in SBI comes ahead of its board meeting on June 11 where $3 billion fundraising will be considered.

At the time of writing, SBI's share price traded at Rs 822 apiece, up by 4.10% on BSE.

SBI shares opened at Rs 802.75 apiece and soon skyrocketed to hit an intraday high of Rs 824 apiece. Overall, SBI shares gained by 4.35%. This led its market value to surge by Rs 30,655.84 crore to Rs 7.35 lakh crore. These gains were from 9:15 am to 9:40 am of Thursday, and so far highest in the day.

On the previous day, SBI's share price stood at Rs 789.65 apiece with a market cap of Rs 7.04 lakh crore.

In its regulatory filing, SBI has informed that a meeting of the Executive Committee of the Central Board is scheduled on 11th June 2024 to consider the fundraising plan.

On June 11, the board members will examine the status and decide on long-term fundraising in single/multiple tranches of up to US$ 3 Billion (US$ Three Billion) under Reg-S/144A, through a public offer and/or private placement of senior unsecured notes in US Dollar or any other major foreign currency during FY 2024-25.

Earlier this year, SBI raised approximately $600 million via 5-year US dollar-denominated bonds through its London brand. It had a coupon rate of 5.1%. While in 2023, SBI raised about $250 million in December 2023, through the issuance of green bonds.

Recently, SBI sent a call option notice to bondholders for the redemption of Tier-2 bonds worth Rs 5,000 crore which was issued on June 28, 20219 at a coupon rate of 7.99% per annum. RBI has approved the same.

As per the regulatory filing, SBI stated that this call option may be exercised by the bank at its sole discretion on June 28, 2024.

Accordingly, notice is hereby given to the Bondholders that the Bank has decided to exercise the call option on the Non-Convertible, Taxable, Redeemable, Subordinated, Unsecured, fully paid-up Basel III Compliant Tier 2 Bonds on the call option date i.e., 28.06.2024. RBI has granted permission in this regard vide letter dated 31.05.2024, SBI said.

FY24 net profit of SBI stood at Rs 61,077 crores witnessing a growth of 21.59% YoY after accounting for wage settlement and one-time exceptional item of Rs 7,100 crores. Net Profit for Q4FY24 grew by 23.98% to Rs 20,698 crores. Meanwhile, Net Interest Income (NII) for FY24 increased by 10.38% YoY. Also, the Whole Bank NIM for FY24 is marginally down by 9 bps YoY to 3.28%.

SBI's Capital Adequacy Ratio (CAR) as of the end of FY24 stands at 14.28%.

Should you buy SBI shares? In its latest research report, ICICI Direct said, "SBI has demonstrated its strength in the last few quarters both on core operating performance and asset quality. Management remains confident in growth, maintenance of margins and improvement in RoA. Sustained balance sheet growth (13-15%), strong liabilities franchise and prudent asset quality are expected to aid RoA at ~1% in FY25-26E."

Further, the brokerage's note said, "Gains on treasury and recovery from existing stressed book to act as a catalyst. Valuing the bank at ~1.6x FY26E BV and subsidiaries at ~₹184/share, we revise our
target price at ₹1000 (from ₹800). Maintain Buy."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns. in advises users to consult with certified experts before making any investment decision.