Buy SBI For A Target Price Of Rs. 570 For 2 Quarter: HDFC Securities

Markets are once again in the green owing to the easing global tensions and Nifty in the afternoon session in trade on March 16, 2022 is trading up by 1.5%. The momentum is positive all through with Nifty Bank up by 620 points, while the broader indices rallied too.

Buy SBI suggest HDFC Securities

Given the current share price of SBI of Rs. 491.3 per share, the stock can yield a return of 16%. The target price is said to hit in 2 quarters. Investors are suggested to buy the scrip for Rs.
Rs.475-465 & add more on dips of Rs.420 band for next 2 quarters

Low cost funds, corporate loans to PSU, retail book majorly skewed to government employees

As per the brokerage firm among most large banks in the country, SBI is better placed to tackle asset quality issue. At the same time it does not faces any liability side risk i.e. in respect of the deposits. Further, as we all know that banking industry has a far fetched connection with the economy's growth and government doing all its bit to support the economy, there is sure to be seen a positive impact on banks too.

"SBI's large and granular deposit base is backed by low-cost CASA and this gives it access to low cost funds which is its biggest competitive advantage", said the report. Further, the bank's subsidiary offers a margin of safety.

Banking industry sees a whole lot of tailwinds that will be supportive of PSBs

1. PSB privatization theme

2.Resolution program through IBC

3. Improved credit growth

Across banking sector there is seen improvement in the balance sheet and revival cycle has taken off. As per the brokerage, "strong credit growth rebound along with lower needfor credit cost could inflate the earnings for PSBs".

SBI trades at hefty discount so brokerage believes it to be an opportune time to enter the scrip:

"SBI has reported powerful performance in Q3FY22. The loan book has witnessed strong growth and lower slippage quantum was the key
positive surprise element. The brokerage expects SBI to grow its loan book at 11% CAGR while NII and Net profit are expected to grow at 11% and 34%
CAGR respectively over FY21-24E. ROAA is estimated to improve a bit to 0.9% in FY24E from current 0.5% in FY21. The bank is looking at
an overall loan growth of ~9% in the near term with recovery in corporate lending while retail loans growth could remain at 14-15% levels.
The bank is expecting to recover Rs.80bn in FY22, of which almost Rs.56bn has been recovered in 9MFY22. We continue to watch out for the steady-state impairments and credit costs, as the bank gradually re-risks the portfolio", mentions the brokerage.

Disclaimer

The stock is trading at a huge discount from its all time high and the stock is taken from the report of HDFC Securities.