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State Bank of India shares target raised by CLSA, Outperform rating maintained

EditorTanya Mishra
Published 2024-08-05, 10:58 a/m
SBI
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CLSA has updated its outlook on the State Bank of India (SBIN: IN), increasing the price target to INR1,075 from the previous INR1,000. The firm maintained the stock's Outperform rating, reflecting a positive view of the bank's recent performance.

The State Bank of India reported a stable quarter, with loan growth holding steady at 15%, mirroring the figures from the fiscal year 2024. The bank's net interest margin (NIM) remained consistent quarter-over-quarter at 3.2%, adjusting for one-time items, and showed a slight year-over-year decrease of approximately 0.12 percentage points.

Despite a rise in credit costs to 37 basis points from 15 basis points in the prior fiscal year, these figures are still below the usual run-rate levels.

The management of the State Bank of India anticipates maintaining a loan growth rate of 15% and preserving margins at the current levels for the fiscal year 2025. Operational expenses were reported to be lower than anticipated, and the bank has set a target to sustain a cost-to-income (C/I) ratio of 50%.

However, the bank did face challenges in the quarter, with a noticeable slowdown in deposit growth to 8% year-over-year and fee growth remaining in the mid-single digits.

In light of the lower operational expenses, CLSA has adjusted its profit after tax (PAT) estimates for the bank upwards by 2%-5%. Consequently, the firm has revised its sum-of-the-parts (SOTP)-based target price to INR1,075 while reiterating its Outperform recommendation for the bank's stock.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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