SBI Q3 Review: Brokerages Maintain 'Buy' Ratings Despite Profit Dip
The bank's operating profit declined 19.36% year-on-year to Rs 20,336 crore. This was excluding the wage revision impact of Rs 6,313 crore.
Brokerages maintained their positive call on State Bank of India Ltd. even as its third quarter profit fell 35.4%, missing analysts' estimates.
The public sector lender's standalone net profit stood at Rs 9,163.96 crore for the quarter-ended December, as compared with Rs 14,205 crore over the same period last year. Analysts polled by Bloomberg estimated a profit of Rs 13,325.9 crore.
State Bank of India Q3 Highlights (Standalone)
Net profit: Rs 9,163.96 crore vs Rs 14,205 crore, down 35.4% (YoY).
Net interest income: Rs 39,815.73 crore vs Rs 38,069 crore, up 4.5% (YoY).
Gross NPA: 2.42% vs 2.55% (QoQ)
Net NPA: 0.64% vs 0.64% (QoQ)
The bank's operating profit declined 19.36% year-on-year to Rs 20,336 crore. This was excluding the wage revision impact of Rs 6,313 crore. The domestic net interest margin also slipped 4 basis points sequentially to 3.41%. It also made a one-time pension-related provision of Rs 7,100 crore, which showed as an exceptional item.
Here's what brokerages make of the results:
Bernstein
Bernstein retains ‘buy’ on SBI; target price remains at INR 710.
Deposit repricing leads to ~5% YoY Net Interest Income (NII) growth.
RoA impacted by exceptional item.
Values SBI at 1.3x PBV on a 12-month forward basis.
Nuvama
Maintains ‘buy’ with the target price increased to Rs 745, from earlier Rs 705.
Mixed Q3FY24, 32% PAT miss due to a one-time exceptional item.
Strong growth and low Loan to Deposit Ratio.
Lower Net Interest Income (NII) and fees, higher wage provisions.
Cut for FY24 and FY25 by 21% and 9%, respectively, on higher provisions.
Values SBI at 1.3x PBV on a 12-month forward basis.
Dolat Capital
Maintains 'buy' rating at a target price of Rs 750 (earlier INR 730).
In-line NII growth at 5% YoY, NIM at 3.2% (-7bps QoQ).
Slippages were low at 0.6%, while PAT was impacted by one-time pension expense.
Loan growth came in strong at 5% QoQ, broad-based across segments.
Bank valued at 1.3x Sep-25E ABV; increased TP with improved valuation from subsidiaries.
Emkay Research
Maintains 'buy' with a target price of Rs 750, up 7.1%
Reported near in-line PPoP, but higher staff cost, including one-off retirement provision.
Higher slippages QoQ due to one account but NPAs continue to trend down
Staff cost could remain elevated in Q4 due to staff cost and provisions of Rs 5,400 crore
Has now indicated to raise capital soon
Trim FY24 estimates by 6%, hike FY25/26 estimates by 3%/9%
