2 weeks Ago
India's largest lender, State Bank of India is the top banking sector pick for brokerage firm Nomura, who has maintained its "buy" recommendation on the stock with a price target of ₹980. NSE SBI shares have been flat over the last one month and Nomura's price target now implies a potential upside of 25% from Tuesday's closing levels. Nomura believes that SBI should continue to do well on the asset quality front.
For the June quarter, SBI's gross NPA stood at 2.21% from 2.24% in March, while its net NPA remained unchanged at 0.
57%. SBI is relatively well-placed amidst both tougher deposit conditions and potential rate cuts. While SBI does not disclose business momentum prior to its quarterly results, most of the other banks in the system have delivered deposit growth ranging from 8% to 15% year-on-year for the quarter.
There were concerns during the quarter that banks are losing deposits which are being deployed into the equity markets. SBI is also well-placed on potential tighter draft regulations, Nomura wrote in its note. At the current price, SBI's valuations are at 1 times financial year 2026 price-to-book and 6.
7 times price-to-earnings, which, according to Nomura, is "attractive". Out of the 49 analysts that have coverage on SBI, 39 of them have a "buy" rating on the stock, while five each have a "hold" and "sell" rating respectively. However, Nomura's price target of ₹980 is not the highest.
As many as 20 analysts who have coverage on the stock have a price target in excess of ₹1,000. Shares of SBI ended 1.3% higher on Tuesday at ₹781.
The stock is down 14% from its recent peak of ₹912. Shares have risen 21% so far in 2024..
