This week, the stock of India’s largest public sector bank experienced a significant surge following its robust Q4 performance, prompting brokerages to issue favorable Buy ratings.
On Friday. At 11:40 a.m., State Bank of India shares were trading at ₹823.30 per share, up 0.45 percent on the National Stock Exchange. The company has a market capitalization of ₹ 7,31,461 crore.
The largest bank in India, State Bank of India (SBI), offers a comprehensive array of retail and corporate banking services, as well as insurance, mutual funds, and other financial products, accessible through its extensive branch network and digital platforms.
In the fiscal year 2024, the company saw significant improvements across various financial metrics. The net profit surged to ₹61,077 crores, marking a robust growth of 21.59% year-on-year (YoY).
In the fourth quarter of FY24, the net profit reached ₹20,698 crores, reflecting a substantial increase of 23.98% YoY. SBI also demonstrated noteworthy performance, with its operating profit for FY24 reaching ₹ 93,797 crores, up by 12.05% YoY. Similarly, the operating profit for Q4 FY24 surged to ₹ 28,748 crores, a growth of 16.76% YoY.
The company’s return on assets (ROA) for FY24 stood at 1.04%, marking an increase of 8 basis points (bps) YoY. Additionally, the return on equity (ROE) for FY24 reached 20.32%, up by 89 bps YoY. However, there were slight decreases in the whole bank net interest margin (NIM) and domestic NIM, which stood at 3.28% and 3.43% for FY24, respectively, down by 9 bps and 15 bps YoY.
Furthermore, the bank exhibited improvements in its asset quality, with the gross non-performing assets (NPA) reducing to 2.24%, a decline of 54 bps YoY, and the net NPA decreasing to 0.57%, down by 10 bps YoY. The net interest income of the bank witnessed a notable increase of 19.46%, rising from ₹92,951 crores to ₹1,11,043 crores.
In summary, for FY24, the bank achieved an ROA and ROE of 1.04% and 20.32%, respectively, reflecting its continued growth and stability in financial performance.
In FY24, SBI’s credit growth stands at 15.24% YoY, driven by a 16.26% YoY increase in Domestic Advances. Corporate Advances and Agri Advances have surpassed ₹11 lakh crore and ₹3 lakh crore, respectively. Foreign Offices’ Advances have grown by 9.47% YoY. Retail Personal Advances and Corporate loans have both seen YoY growth, reaching 14.68% and 16.17%, respectively.
Given the positive outlook on the company, numerous brokerages have expressed optimism. JP Morgan, for instance, has recommended an overweight position,for a target of ₹1,000 per share, reflecting a 22% upside from Friday’s trading price.
Similarly, CLSA has recommended a ‘buy’ on the State Bank of India, keeping a target price of ₹1,000 per share. Kotak Institutional Equities has also revised its price target for SBI to ₹950 while maintaining its “buy” recommendation, citing expectations of a stable performance amid a relatively steady macroeconomic environment for lenders.
Nomura, a brokerage firm, has elevated SBI to its top pick status, increasing its price target for the bank to ₹1,000 from ₹825. Additionally, it has heightened its estimates for SBI’s Earnings per Share for financial years 2025 and 2026 by 15%, while reducing its credit cost estimates for the same period to 0.4% from the previous 0.55%.
Furthermore, Nomura anticipates a Return on Assets of 1% and a Return on Equity ranging between 17% to 18% for financial years 2025 and 2026, coupled with a projected loan growth of 14%.
In terms of performance, shares of State Bank of India have surged by 41% in the past six months and 43% in the past 12 months.
Written by Omkar Chitnis
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