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Motilal Oswal Report
State Bank of India shares are likely to remain in focus after Motilal Oswal reiterated its 'Buy' rating on the stock and retained a target price of Rs 1,370, implying an upside potential of about 25% from the current market price of Rs 1,097.
The brokerage's positive stance follows SBI's stronger-than-expected June quarter performance. The lender reported a net profit of Rs 21,120 crore for Q1 FY27, up 10.2% YoY and around 15% ahead of Motilal Oswal's estimates, supported by healthy treasury income and controlled operating expenses.
Net interest income (NII) rose 14.4% YoY to Rs 46,990 crore, broadly in line with expectations. Meanwhile, net interest margin (NIM) improved 5 basis points sequentially to 2.86%, while domestic NIM expanded 7 basis points to 3%, helping the bank achieve its full-year domestic margin guidance.
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Valuation and view:
The brokerage highlighted that SBI delivered a steady quarter, with healthy NII, while NIMs expanded following the sharp decline seen in Q4. The bank now matches its domestic NIM guidance of 3% and expects to sustain this level for FY27, supported by improving yields and a healthier credit growth outlook of 14-15%.
Treasury gains remained strong and provided support to PAT. Besides, treasury and opex remained well under control, resulting in a better-than-expected pre-provision operating profit performance.
Management continues to remain constructive on loan growth and has reiterated its guidance of 14-15% growth going forward. Asset quality remained resilient overall, although slippages were marginally higher during Q1 due to seasonal factors.
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