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Buy State Bank of India: target of Rs 650: Sharekhan

Buy State Bank of India: target of Rs 650: Sharekhan
December 23
16:24 2021

Sharekhan is bullish on State Bank of India has recommended buy rating on the stock with a target price of Rs 650 in its research report dated December 22, 2021.

Broker Research

December 23, 2021 / 02:00 PM IST

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

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Sharekhan’s research report on State Bank of India

State Bank of India (SBI) offers a good investment opportunity as the stock has corrected by 16% from its peak. With a strong retail franchise and recovery in the asset quality, particularly the corporate book, we believe the bank is well positioned than its peers to deliver strong advances and PAT growth. We believe the bank is better placed in terms of loan underwriting practices as compared to its PSU peers, which has helped the bank to maintain its asset quality at ~5% in the past six quarters. The company’s GNPA and NNPA ratio improved by 42 bps and 25 bps q-o-q to 4.9% and 1.5%, respectively, in Q2FY2022. SBI is well capitalised with a capital adequacy at 13.35% as of September 2021 and is expected to reap the benefit of pickup of the system’s credit growth being a dominant PSU player, which is likely to be a trigger for its performance going ahead.

Outlook

Hence, we reiterate our Buy rating on SBI with a revised SOTP-based PT of Rs. 650. At the CMP, SBI trades at 1.5x its FY2023E P/BV.

For all recommendations report, click here

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