SBI Shares Trade In Red After State-Owned Lender Raises Rs. 10,000 Crore Via Infra Bonds

SBI shares traded almost 1% lower on Monday (September 25) after the state-owned lender said on Friday that it has raised Rs. 10,000 crores at a coupon rate of 7.49% through its fourth infrastructure bond issuance. Today, the share price of the State Bank of India was spotted trading 0.94% lower at Rs 592.50 per share at 11:13 am IST. The last 6-month returns from the bank have increased almost 16%.

The country's largest lender informed the Indian bourses last week that the issue attracted an overwhelming response from investors with bids of Rs. 21045.10 crores and was oversubscribed by more than 5 times against the base issue size of Rs. 4,000 crores. The total number of bids received was 134 indicating wider participation with heterogeneity of bids. This issuance is seen to be very significant as the Bank has been successful in raising long-duration bonds successively at a finer spread.

According to the Bank, the investors were across provident funds, pension funds, insurance companies, mutual funds, corporates etc. The proceeds of bonds will be utilized in enhancing long-term resources for funding infrastructure and the affordable housing segment.

The lender intends to use the proceeds of a bond issue to enhance long-term resources for funding infrastructure and the affordable housing segment, SBI said in a BSE filing on September 22.

Prior to this, the Bank had raised Long Term Bonds of Rs. 10,000 crores on August 1, 2023, at a spread of 13 bps over the corresponding FBIL G-Sec par curve. According to the company announcement, SBI has a AAA credit rating with a stable outlook from all domestic credit rating agencies for these instruments. With the current issuance, the total outstanding Long-Term Bonds issued by the Bank is at Rs. 39,718 crores.

Brokerage Call:

Brokerage firm Bonanza has assigned a buy call to SBI shares with a target price of Rs 688. if you buy SBI shares at Rs 573, you can fetch a potential return of 20%.