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Buy State Bank of India, target price Rs 650: Prabhudas Lilladher

Prabhudas Lilladher has buy call on State Bank of India with a target price of Rs 650. The current market price of is Rs 531.8. Time period given by analyst is one year when State Bank of India price can reach defined target.

State Bank of India, incorporated in the year 1955, is a banking company (having a market cap of Rs 474566.23 Crore).

State Bank of India key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest and Interest On Balances with RBI and Other Inter-Bank Funds for the year ending 31-Mar-2022.

Financials

For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 94524.30 Crore, down -12.51 % from last quarter Total Income of Rs 108034.68 Crore and up 1.35 % from last year same quarter Total Income of Rs 93266.94 Crore. The bank reported net profit after tax of Rs 7325.11 Crore in latest quarter.

Investment Rationale
With cash flows normalizing for SMEs, the ECLGS/OTR pools are also performing well. Underwriting has strengthened with induction of non-sales personnel in credit appraisal and robust credit research across 36 sectors. Asset quality may remain under control and target is to keep credit costs below 1%. While the brokerage slightly tweaks estimates, it expects a core PAT CAGR of 20% over FY22-25E. Retaining the multiple at 1.4x, it rolls forward to core Sep’24 ABV, raising SOTP based TP from Rs620 to Rs650. Maintain ‘BUY’.


Promoter/FII Holdings
Promoters held 57.57 per cent stake in the company as of 30-Jun-2022, while FIIs owned 9.62 per cent, DIIs 25.09 per cent.

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