SBI actions are in the news again and it was given a call to buy today given over the counter ie at price points of Rs. 385-390 per share. In the long run, the PSU lender’s share price is expected to reach Rs. 600, which is a run of over 50%.
Saurabh Jain of S&P believes that the SBI share price has risen slightly since the 2021 budget. This is due to the focus by Narendra Modi’s government on PSU profitability. On various occasions, the government has made it clear that it will reduce its stake in all loss-making PSUs. Also, in recent times the bank has performed well at the retail level which is also a boost for lender PSB’s stock. And the SBI stock is actually the preferred choice of the space.
In addition, according to the Morgan Stanley report, which for the first time in 13 years launched holistic coverage of PSBs, there is a case for moderation of bad debts in the future for these lenders. In addition, their balance sheets are improving. In addition, three consecutive quarters of good financial figures for PSBs have increased their appeal.
Speaking in particular of the window of the State Bank of India:
“SBI’s performance has been strong with NIMs despite high liquidity remaining 20bp above FY20 levels and the highest NIMs over the past six years. Over the past 1 to 2 years, SBI has reduced its SA rates by 100bp and has consistently maintained a CASA ratio of 45%, “CLSA said.
In addition, he considers that the current revaluation of the meter should continue and that the SBI meter remains a high value-added opportunity and lists three reasons for the same:
1]SBI is among the biggest beneficiaries of the benign business credit cycle;
2]Unlike its peers, SBI over the past decade has gained market share in both its deposit and loan portfolio.
3]The ROA of 90 basis points will be comparable to the FY10-14 cycle.
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Article first published: Tuesday March 9, 2021, 2:23 PM [IST]