SBI Q4 Results Review - Robust Quarter; Several One-Offs Aid Earnings Beat: Dolat Capital

Dolat Capital Report

State Bank of India reported in-line net interest income growth, with 3.3% net interest margin (+8 bps QoQ). A significant profit after tax beat was driven by several one-offs including higher int on IT refund, lower employee expense versus previous estimates, higher recovery from written off accounts, and Rs 17 billion of standard provision reversals.

Robust loan growth at 5% QoQ was led by domestic corporate book (+11% QoQ), with 7% growth in domestic advances. We build in higher growth estimates at 14% for FY25E. SBI guides for limited impact from recent project finance exposure draft guidelines. Bank’s higher standard provisioning buffers versus peers should hold it in good stead amidst any contingencies.

We upward revise our FY25/26E earnings estimates by 4-5%, mainly led by higher growth assumptions. Maintain ‘Accumulate’ rating with target price of Rs 865 (from Rs 820 earlier), valuing standalone bank at 1.4 times FY26E adjusted book value (against RoA/RoE of 1%/16%) and adding value of subsidiaries. Standalone bank trades at 1.35 times FY26E ABV.

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