SBI Stock: Motilal Oswal Places A “Buy”

Motilal Oswal has a buy rating on the stock of State Bank of India with a target price of Rs 530 per share. The shares of State Bank of India were last seen trading at Rs 412 on the National Stock Exchange.

The brokerage firm believes that the earnings were set to gain pace and the asset quality was robust.

"State Bank of India 4QFY21 result has been nothing less than spectacular. The bank reported 4QFY21 slippages of just Rs 54.7 billion(a 20 quarter low; surprisingly comparable to other Private Banks), thus taking total slippages for FY21 to Rs 285 billion(1.2% of loans), while restructuring book stands controlled at 0.7% of loans," the brokerage firm has noted.

Gross non performing assets at the bank GNPAs fell 15% in FY21 (43% decline over the past three years), while the coverage ratio has increased to 71% at present from 40% four years back.

"Its earnings in FY21 have been more than the sum of what it did in the last five years (FY16-20). Overall, the bank is making strong progress on earnings normalization (FY21 RoE of 9.3%). We expect it to deliver FY22E/FY23E RoE of 13.9%/15%. We maintain our BUY rating with a revised target price of Rs 530 per share(1.1x FY23E ABV+INR187/share from subsidiaries). State Bank of India continues to remain among our top Buys in the sector," the brokerage firm has stated.

Several brokerages have also revised their target price on the stock including CLSA and HSBC.