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Motilal Oswal Report
State Bank of India remains well positioned to deliver sustainable growth with high profitability, led by healthy loan growth, controlled opex and provisions. The management has guided for broadly stable margins going forward as the bank has levers in place (credit deposit ratio, MCLR re-pricing) to mitigate the impact of the elevated cost of deposits.
SBI is well positioned to sustain its growth trajectory, supported by a low CD ratio, strong underwriting and continued momentum in YONO. The asset quality performance remains strong with consistent improvements in headline asset quality ratios.
SBI is one of our preferred ideas in the sector. We estimate a 15% compound annual growth rate in net profit over FY24-26E, with FY26E return on asset/return on equity of ~1.1%/18.5%. Reiterate Buy with a revised target price of Rs 1,015 (1.5 times FY26E adjusted book value plus Rs 235 from subs).
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