SBI - A Look Beyond The Numbers: Nirmal Bang

Nirmal Bang Report

State Bank of India is in the process of launching YONO 2.0 technology platform in order to take digitalisation at the bank to the next level. It is also engaging with fintechs and start-ups to further fortify its digital capabilities.

The bank continues to have leadership position across retail and wholesale segments with market share of 21-63% across key business verticals.

As per its strategy document for FY25-FY29, the focus is on:

1. Strengthening customer relationships and engagements,

2. Reducing the cost of deposits,

3. Increasing profitability and,

4. Strengthening risk management and governance.

The bank’s ESG unit targets to facilitate minimum of 7.5% of the bank’s loan portfolio - to be directed towards Renewables/Other Green initiatives by 2030.

SBI received the highest score of 82.6 among PSBs in Q3 FY24 in EASE 6.0 reform index of IBA, which measures and monitors the performance of PSBs. Employee attrition rate is among the lowest in the industry at 4.07%, with majority of separation coming from retirement.

We expect SBI’s PAT to clock a CAGR of 16.6% over FY24-FY26E, which will be supported by 15.2% CAGR in loan growth, stable margins, improved cost ratios and credit cost of 50bps. This will lead to RoA/RoE of 1.1%/17.8% in FY26E. 

We have valued SBI at 1.6 times March 2026E adjusted book value plsu subsidiary value per share of Rs 237.9, thus deriving a target price of Rs 1,003.

We are positive on SBI for the long term considering the bank’s leadership position in Corporate and Retail lending (which enables it to choose best quality credit), ample liquidity on the balance sheet (providing stability to its margins) and pristine asset quality. We maintain Buy on SBI.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.