SBI's Chairman Dinesh Khara May See 10 Months Extension; Stock Falls, Erases Over Rs 7,675 Crore M-Cap

The share price of State Bank of India (SBI) traded in red on Friday after reports claimed that the lender's chairman Dinesh Khara may see the extension in his tenure by another 10 months. Khara is set to retire at the age of 63 from SBI. The largest PSU Bank's stock has dipped by nearly 1.5% and lost over Rs 7,675 crore of market cap in single-day on BSE.

At the time of writing, SBI's share price traded at Rs 568.10 apiece, down by 1.49% on BSE. The stock was near its intraday low of Rs 567.65 apiece.

The bank erased over Rs 7,675 crore of market cap in a little over an hour of the opening bell on Friday. The m-cap stood at Rs 5,07,007.20 crore at the current market price, compared to previous session's m-cap of Rs 5,14,682.37 crore.

On the previous day, the stock ended at Rs 576.70 apiece.

Its market cap stood at Rs 5,11,157.15 crore. SBI is the third largest bank in India, but the largest in the public sector. HDFC Bank is the largest and ICICI Bank is the second largest lender in the country.

Sources told CNBC TV18, that Dinesh Khara, the current Chairman of the State Bank of India (SBI), is likely to have his tenure extended by another 10 months. This could mean he leads SBI for almost another year, going beyond his current term, which was supposed to end this October.

It needs to be noted that SBI or the government has not made any official announcement in this regard.

The central government appointed Dinesh Khara as the Chairman of SBI with effect from October 7, 2020, for a tenure of three years. This tenure will end soon in October 2023 as per the schedule, until further notice from SBI.

According to SBI's retirement rule, the chairman is set to retire when they turn 63. Khara became chairman of SBI at the age of 60 and he will turn 63 years old on August 28, 2023.

Before becoming the chairman of SBI, Khara was the Managing Director (Global Banking and subsidiaries) of the Bank. In his role as MD (GB&S) he led and steered the International Banking Group, Corporate and Treasury operations of the Bank. Additionally, he also took charge of the Risk, IT and compliance functions of the Bank. Earlier, Khara was the MD&CEO of SBI Funds Management Pvt. Limited (SBIMF).

Khara's journey with SBI began in 1984 as a Probationary Officer, and he has approximately 39 years of experience in all facets of banking.

Khara has his Masters in Business Administration from FMS New Delhi and is a post-graduate in Commerce from Delhi School of Economics. He is also a Certified Associate of the Indian Institute of Bankers (CAIIB).

Post Q1 earnings, JM Financial in its review report said, " Management indicated that they strive to maintain FY24 NIMs at levels similar to FY23 (i.e. 3%). Given excess SLR of c. Rs 4 trillion and an uptick in yields led by MCLR repricing should give incremental cushion to NIMs for SBI. Asset quality performance remains stable with controlled slippages at Rs 78.7 billion with GNPL/NNPL at 2.76%/0.71% (-2bps/+4bps QoQ). We believe delivery of growth on guided lines, sustenance of NIMs near current levels and controlled asset quality parameters driving moderate credit costs will drive incremental stock returns for SBIN. We build in RoA/ RoE of 1.0%/17.2% for FY25E. We value the core banking business at 1.2x FY25E P/BV and we arrive at our revised SoTP-based target price of Rs 710. Maintain BUY."

Taking into consideration the current market price and the target price set by JM Financial, SBI shares have the potential to nearly 24% upside ahead.

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