Shares in public-run lender State Bank of India (SBI) jumped as much as 15% in intra-day deal on Friday after the bank posted better than expected earnings for the December ended quarter of FY21. The stock hit its fresh 52-week high of Rs. 408.35 per share on the NSE. Since the earnings announcement made yesterday, the scrip has surged more than 20%.
The country's leading PSB reported a 7% decline in net profit to Rs. 5196 crore in Q3FY21 as against Rs. 5583 crore during Q3FY20 on higher provisioning against bad loans. Net interest income (NII) for the firm in Q3FY21 rose 3.7 percent to Rs 28,820 crore from Rs 27,779 crore, YoY. NIM or net interest margin however stood steady quarter on quarter at 3.34 percent.
There was also reported improvement in asset quality with gross NPA shrinking 6.4 percent from Rs. 1.25 lakh crore to Rs. 1.17 lakh crore and net NPA declined 20.4 percent from Rs 36,450.7 crore to Rs. 29,031.7 crore quarter on quarter.
Also, brokerages maintained their bullish view on the scrip of SBI and increased the target price for the 12-month period owing to strong asset quality numbers post Covid 19 crisis. Citi has given a 'Buy' recommendation on the SBI counter and raised its price target from Rs. 350 to Rs. 430 per share. Lower than expected stress level, improvement in loan growth, and strong deposit traction should drive earnings, it added.
CLSA also maintains a 'buy' call on the stock and raised its target to Rs 560 per share from Rs 385 earlier. It sees a substantial rerating for the stock due to better than expected Q3 earnings."SBI's 3QFY21 performance was much better than expected, with 3QFY21 gross slippages of just Rs 2500 crore which is the best among banks under our coverage that has reported and now full-year slippages of 1.5 percent of loans is the lowest the bank would have seen in the last 15 years," CLSA said.
Credit Suisse has given an 'outperform' call on the stock and raised its target to Rs 460 per share from Rs 270 earlier. It expects growth to pick up and sees RoEs improving to over 12.5 percent. Credit costs are also expected to moderate in FY22 on reassuring trends on asset quality, it added. CS also raised EPS estimates by 13-40 percent.