The shares of India’s largest public sector bank with deposits crossing Rs. 54 Lakh Crores are in focus after Jefferies initiates a ‘Buy’ coverage on it with an upside potential of 21 percent.
With market capitalization of Rs. 7,05,223 cr., the shares of State Bank of India which is currently trading at Rs. 793 per share, compared to its closing price of 796.15.
Global brokerage firm Jefferies issued a “buy” recommendation on State Bank of India (SBI), assigning a target price of Rs 960 per share, implying a potential upside of 21 percent.
Analysts at the firm note that while economic activity remained modest in the first quarter, conditions are expected to improve in the second and third quarters, driven by the Reserve Bank of India’s monetary easing and the effects of tax reductions.
Jefferies forecasts a 12% credit growth and 10% deposit growth for the public sector bank, supported by sufficient liquidity reserves. Despite short-term pressure on net interest margins from expected rate cuts, the bank is projected to sustain a return on assets (RoA) of 1%.
The Bank operates in four business segments, namely Treasury, Corporate/ Wholesale Banking, Retail Banking, and Other Banking Business. The Treasury segment includes the investment portfolio and trading in foreign exchange contracts and derivative contracts. The Corporate/ Wholesale Banking segment comprises the lending activities of Corporate Accounts Group, Mid Corporate Accounts Group, and Stressed Assets Management Group.
The Retail Banking segment consists of branches in the National Banking Group, which primarily includes personal banking activities, including lending activities to corporate customers having banking relations with branches in the National Banking Group.
State Bank of India (SBI) has delivered strong financial performance for FY24 on a consolidated basis. The bank reported a total revenue of ₹490,938 crore and a net profit of ₹80,523 crore as of FY25, highlighting robust profitability.
Its earnings per share (EPS) stood at ₹86.91, with a return on equity (ROE) of 17.2%, reflecting efficient capital usage. SBI also has a dividend yield of 2.03%, rewarding shareholders on the back of its solid earnings.
The company has delivered good profit growth of 30.67% CAGR over the last 5 years and has been maintaining a healthy dividend payout of 18.2%.
On the balance sheet front, SBI continues to maintain a strong financial position with total assets reaching Rs. 73,13,730 crore. The bank’s deposit base stood at Rs. 54,39,898 crore. The bank’s healthy net interest margin (NIM) of 3.09% underlines stable core banking operations.
Written by Manideep Appana
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
