Buy The SBI Stock Says Prabudas Lilladher For An Upside Of 34%

Broking firm Prabhudas Lilladher (PL) has recommended buying the stock of State Bank of India for a target price of Rs 730. This implies an upside of nearly 34% from the current levels.

SBI: Net interest income a beat, says PL

According to PL Opex was tad more at Rs 243 billion (Ple Rs241bn), led by higher staff cost. Given stronger NII and other income, core PPOP was a beat at Rs223bn (PLe Rs212bn). GNPA was lower and improved 38bps QoQ to 3.14%. Provisions were a miss at Rs57.6bn (PLe Rs34bn) owing to std. asset provision of Rs42.3bn. PAT was a beat at Rs142bn (Ple Rs135bn).

Adani exposure at 0.88%

According to Prabhudas Lilladher, the wage revision is to be Rs 5 bn per month. "While Adani group exposure is 0.88% of total loans, same is below large exposure framework (LEF) and till date there have been no issues on loan repayment or servicing. Loans are extended against operating businesses and assets that generate cash. Payments relating to loans sanctioned for under-construction projects are being made on schedule. No finance has been extended against promoter's equity. On opex, wage revision would be provided for 36 months with a 10-12% rise which would translate to Rs 5.0 bn per month," the brokerage has said.

Buy the stock of SBI with a price target of Rs 730, says PL

Bank sees FY24E loan growth at 14-16%. Slower deposit growth may not be an issue in near term, as there is excess SLR of Rs3.2trn. Asset quality was stable QoQ although bank created std. buffer asset provision of Rs42.3bn. Adani group exposure is 0.88% of total loans. "Till date there have been no repayment issues, as loans are backed with cash generating assets and no finance is extended against promoter's equity. We maintain our multiple at 1.6x on Sep'24 core ABV and SOTP based target price at Rs730. Retain 'BUY'," the brokerage has said.

Disclaimer

The stock is picked from the brokerage report of Prabhudas Lilladher. Greynium Information Technologies, the brokerage house and the author are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.