SBI's Stock Price Is 'Still Underrated', Says Chairman Dinesh Khara

The share price of the State Bank of India is "still underrated,"  the bank's chairman, Dinesh Kumar Khara, said on Tuesday.

"Considering the kind of network, the quality of book and the way we're investing in technology, we're actually creating the muscles of the bank; I would say it is still underrated," Khara said at ET Now's Leadership Dialogues 2024 event.

The stock price of India's largest state-run lender rose to a record of Rs 912.10 on June 3, with its market touching Rs 8.08 lakh crore. On Tuesday, the metric was Rs 7.53 lakh crore, not too far behind its private peer ICICI Bank Ltd., at Rs 7.89 lakh crore.

"It gives me a lot of satisfaction because, in turn, I have created value for my stakeholders," Khara added.

Khara is "a little more optimistic" on India's GDP growth and expects 7.5–8% growth in the ongoing financial year. The bank's credit growth, he said, is targeted at 14–15% for FY25, with a major push coming from retail, small and medium enterprises, corporate and agriculture sectors.

He also said that excess liquidity in the financial system needs to be avoided if India is to emerge as a developed economy.

"Allocation of liquidity between stock markets, financial markets and the banking system will take its course," he said. "The ability to source deposits across the geography by offering multiple products will perhaps be the differentiator."

The SBI's chairman is confident of its capital adequacy, and raising capital, if needed, wouldn't be a challenge. "The return on earnings is much higher than loan book growth," he said. "That gives us an organic way of generating capital."

Khara sees the return on assets rising to at least 1.10% for FY25.

Green Financing Is Key Focus

Khara spoke about an internal resolution towards green financing, under which scope-1 and scope-2 emissions should be achieved significantly by 2030.

Scope-1 covers emissions from sources that a company owns or controls directly. For instance, burning fuel in a fleet of vehicles owned by the company. Scope-2 are indirect greenhouse gases emissions associated with the purchase of electricity, steam, heat, or cooling.

The bank has also resolved to earmark 7.5% of its total advances towards green projects in next 5-6 years, he added.

SBI's focus will be on technology adoption and hyper-personalisation—in which it will use artificial intelligence and real-time data to display curated products.