SBI beats estimates with 83% profit jump | Check out what brokerages say

State Bank of India Q4: Net interest income came in at Rs 40,392.50 crore, rising 29.5 percent from Rs 31,197 crore.

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The State Bank of India (SBI) share price will remain in focus on May 19, a day after company posted robust numbers for the quarter ended March 2023.

SBI on May 18 reported a standalone profit of Rs 16,694.51 crore for the March quarter, up 83.18 percent from Rs 9,113.53 crore in the same quarter of the previous.

India’s largest lender’s net interest income came in at Rs 40,392.50 crore, rising 29.5 percent from Rs 31,197 crore in the corresponding quarter of the previous year.

State Bank of India was expected to post a 68 percent rise in profit over the last year, according to a Moneycontrol poll of brokerages. Whereas net interest income (NII) was expected to increase 25.8 percent.

SBI’s board recommended a dividend of Rs 11.30 per equity share for FY23. It will be paid on June 14, 2023, the bank said.

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Here is what brokerages have to say about stock and the company post March quarter earnings:

Motilal Oswal

The company delivered a mixed quarter led by margin expansion and lower provisions driving earnings while higher opex hurt operating profits.

Business growth remained healthy driven by growth across segments. A higher mix of floating loans (MCLR), which could benefit further from re-pricing, will continue to support NII and overall earnings even as the deposit cost could increase.

Asset quality was strong with tight control on slippages and improvement in headline asset quality ratios, with the restructured book being under control at 0.8%.

Motilal Oswal estimate the bank to deliver FY25 RoA/RoE of 1.0%/ 17.1%. Reiterate buy with an unchanged Target Price of Rs 700 (based on 1.2x Sep’24E ABV + INR190 from subs).

Nirmal Bang

The banks 4QFY23 performance was healthy, driven by balance sheet momentum, NIM expansion and lower provisioning. Balance sheet expansion was driven by domestic credit and deposit growth at 4.9% QoQ and 5.1% QoQ, respectively.

The management expects credit growth to moderate to ~12-14% while on the deposit front the bank is still at a comfortable position with C/D ratio at 72.3%.

Also, the SBI management indicated that the bank carries excess SLR of Rs 4 trillion, which is likely to support growth going forward.

Asset quality continued to show an improvement, driven by lower slippages and higher recoveries & upgrades. The bank registered almost a decade high RoA/RoE of 1.2%/20.6% for 4QFY23 and Nirmal Bang expect it to clock RoA/RoE of 1%/16% for FY25E.

Maintain Buy on SBI with a target price (TP) of Rs 664 (SOTP).

Morgan Stanley

Broking firm assigned an overweight rating with a target price of Rs 715 per share. The profit after tax (PAT) was above estimates, helped by higher margins, lower credit costs, and high treasury gains.

The loan growth remained strong at 17% year-on-year and common equity tier 1 (CET 1) ratio moved lower quarter-on-quarter (QoQ) to 10.3%.

Morgan Stanley has FY24 earnings estimates led by lower credit costs.

JPMorgan

Brokerage house has kept overweight rating with a target price of Rs 720 per share. The net income was 11% ahead driven by lower provisions. The operating profit was in line with expectations

The domestic loan growth stood at 16%, which was higher than the overall system. However, only negative was the elevated capital expenditure (capex).

Bernstein

Research house has kept outperform rating on the stock with a target price of Rs 700 per share. The Q4 earnings per share (EPS) was led by strong loan growth, margin expansion, and lower credit costs.

The only negative was continued surge in Opex potentially led by wage revision.

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