SBI Share Price Today: CLSA and Jefferies highlights some key pointers for Investors

SBI Share Price Today: Jefferies highlights that SBI reported profit of Rs 51bn (-7% YoY) and ahead of their estimates in Q3. The operating profit was below our expectations largely due to higher staff costs, but this was more than compensated by lower than expected credit cost. Loans were up 8% and NII rose by 4% YoY.

CLSA increased their price target on State Bank of India (SBI) to Rs 560. SBI’s Q3 FY21 performance was much better than expected: Reuters

SBI Share Price Today: Jefferies highlights that SBI reported profit of Rs 51bn (-7% YoY) and ahead of their estimates in Q3. The operating profit was below our expectations largely due to higher staff costs, but this was more than compensated by lower than expected credit cost. Loans were up 8% and NII rose by 4% YoY. The key positive was in asset quality with gross NPL ratio (pro forma) at 5.4% of loans and loan restructuring of about 80bps loans. Share price of SBI is flat today trading at Rs 392.

CLSA increased their price target on State Bank of India (SBI) to Rs 560. SBI’s Q3 FY21 performance was much better than expected, with Q3 FY21 gross slippages of just Rs 25 bn (<0.1% of loans) which is the best among banks under their coverage that have reported and now full-year slippages of 1.5% of loans is the lowest the bank would have seen in the last 15 years.

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SBI has been a consistent market-share gainer over the last decade and now with a dual benign credit cycle from FY22CL. SBI’s asset quality is finally delivering better asset quality outcomes vs even private banks.

CLSA revises up their earnings by 15-26% and now expects ROEs of 14% by FY23CL. SBI has been a consistent market-share gainer over the last decade and now with a dual benign credit cycle from FY22CL

SBI’s Strong NII provision; large buffers built for employee provisioning:

SBI’s performance has been strong with NIMs in spite of high liquidity sustaining at 20bps higher than FY20 levels and highest NIMs in last six years. Through the last 1-2 years SBI has cut its SA rates by 100bps and still sustained CASA ratio of 45%. SBI’s PPOP drag has been employee provisioning which has increased by +2x in last three years but now it is well provided on wage hike and also on low interest rates.

SBI’s ROEs of 13-14% now; CLSA revise their price target to Rs 560/share (+58% upside):

With CLSA revised earnings, CLSA expects ROEs of 13.5-14% by FY22/23CL now and organically CET to improve to +11% due to higher profitability.

CLSA believes SBI still remains a deep value opportunity and current rerating should continue as:

(1) SBI is one of the biggest beneficiaries of the benign corporate credit cycle
(2) Unlike PSU peers, SBI has gained loan/deposit market share in the last decade
(3) ROAs of 90bps will be comparable to the FY10-14 cycle

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