Analyst Recommendations On State Bank Of India
- Maintains ‘buy’ rating; raises price target to Rs 560 apiece from Rs 385.
- Strong NII provision; large buffer built for employee provisioning.
- Asset quality is delivering better outcomes versus even private banks.
- Revises earnings estimates higher by 15-26% and expects RoEs of 14% by FY23.
- Expects material re-rating beyond 1x book.
- Still remains a deep value opportunity and current re-rating should continue.
Macquarie
- Maintains ‘outperform’ rating; hikes price target to Rs 450 apiece from Rs 360.
- Increased confidence in balance sheet, strong asset quality.
- Pare credit cost assumptions for FY21, FY22 and FY23 by 40, 30 and 30 basis points, respectively, to 240 basis points, 120 basis points and 120 basis points.
- Can sustain RoA of 1%.
- Raises EPS estimates by 77%, 13% and 14% for FY21, FY22 and FY23, respectively.
- Remains top pick among PSUs.
JM Financial
- Maintains ‘buy’ rating; raises price target to Rs 480 apiece from Rs 350.
- Strong results with improvement across all key parameters.
- Expects SBI to report lower slippages / restructuring for FY21, followed by sharp declines in FY22/FY23.
- Liability franchise remains unparalled with deposit growth of 14% and robust CASA ratio.
- Asset quality perceptions kept valuations suppressed despite core fundamentals consistently outperforming.
- Expects RoA/RoE of 0.8% and 15%, respectively, by FY23 as credit costs normalise.
- Expects multiples to re-rate higher as RoAs expand.
- Remains top pick.
Emkay
- Maintains ‘buy’ rating; hikes price target to Rs 460 apiece from Rs 340.
- Once again surprised positively on asset quality.
- Retail credit growth gaining pace which should lead to structurally stronger NIMs.
- Will be one of the biggest beneficiaries of the pick-up in lumpy corporate resolutions stalled for long.
- Revises earnings estimates higher for FY21-23 by 30-60% and expects RoAs and RoEs of 0.8% and 14%, respectively, in FY23.
- Limited stress from Covid, corporate resolutions to drive-down credit costs.
- Likes strong liability profile, higher retail orientation and sharply improving return ratios.
Motilal Oswal
- Maintains ‘buy’ rating; raises price target to Rs 475 apiece from Rs 330.
- Robust operating performance in a challenging environment.
- Asset quality outlook encouraging.
- Slippages plus restructuring to remain within the guided range.
- Strong operating performance, controlled slippages and higher coverage provides comfort.
- Well on track to keep credit costs under control.
- Recoveries from resolution of large accounts can further support earnings.
- Projects RoA, RoE of 0.8% and 14.5% by FY23.
