Government Bank Declares 1130% Dividend, “Buy” The Stock For 35% Upside

State Bank of India recently reported its quarterly numbers, following which the stock of India's top lender fell slightly. Post the quarterly numbers, the stock is down, but, has recovered in trade today.

Buy the SBI stock for 35% returns, Says Prabudas Lilladher

Broking firm, Prabhudas Lilladher has suggested buying the stock for an upside of nearly 35% from current levels. According to the brokerage the shares of SBI, which is trading at Rs 572, can jump to as high as Rs 770.
"While State Bank of India saw a mixed quarter, management sounded confident about maintaining core profitability driven by good quality growth given stronger underwriting, benign asset quality with lower net slippages and multi-year low gross non performing assets," the brokerage stated in its latest report post the quarterly numbers.

Operational expenditure surprises

According to Prabhudas Lilladher, the Operational Expenditure surprised negatively but asset quality was better. "Even after adjusting for wage revision impact of Rs 15bn, staff cost for Q4 was higher due to pension provisions. Other opex too jumped by 26.7% Quarter-on-quarter due to surge in expenses related to technology, business development, ATM and rent. To control opex to income, focus would be more on income side given the rigid nature of costs. Asset quality was better again as slippage ratio was lower at 51bps (PLe 69bps), while recovery ratio too was higher at 15% (PLe 7.5%). State Bank of India clarified that overall ECL impact would be much lower than its std. asset provisions (Rs 25.7 billion) and effect on net profits could be even lesser, as it may be allowed to spread over 5 years," Prabhudas Lilladher has noted.

How the stock of State Bank of India has moved?

The stock of the bank has moved in a very narrow range over the last few quarters. In fact, SBI has hit a 52-week high of Rs 629.65 and the stock has hit a 52-week low of Rs 430.80. Currently, the shares trade at around Rs 575 a piece.

Disclaimer

Please note, the "buy" on the stock is a call from brokerage firm, Prabhudas Lilladher. We do not recommend stocks and only provide information based on brokerage reports. Neither the author, nor Greynium Information Technologies, nor the brokerage firm should be held responsible for losses based on the above article. Please consult a professional advisor before investing.