State Bank of India (SBI) shares can jump around 10 per cent from present levels and can touch Rs 284 in the nex few quarters, according to brokerage firm Geojit BNP Paribas Financial Services. In the past one year, shares of SBI have underperformed benchmark BSE Bankex and advanced 8.18 per cent to Rs 257.35 till September 22, whereas the banking index surged 18.12 per cent during the same period.
For the quarter ended June 30, 2016, the public sector lender reported a consolidated net profit of Rs 1,046 crore, down 77.81 per cent, against Rs 4,713.57 crore in the same quarter last year. However, consolidated total income of SBI increased by 9.90 per cent year-on-year to Rs 69,414.82 crore for the quarter under review. On a standalone basis, the bank reported 31.73 per cent fall in bottomline figures at Rs 2,520.96 crore for the quarter under review. It had posted a standalone net profit of Rs 3,692.43 crore in the same quarter last year.
Geojit BNP Paribas in a research note said, “Potential for significant improvement in profitability and positive outlook on asset quality front makes SBI a preferred pick among the public sector banks. Retail and rated corporate loans would help overall advances to grow at a healthy compounded annual growth rate (CAGR) of 11 per cent over FY16-18E. Outlook on the asset quality is positive and gross NPA ratio is expected to improve by 2017-18E on lower slippages and higher recovery. Fresh slippages were lower by 71 per cent quarter-on-quarter in Q1FY17. Besides, the bank also maintained high provisioning coverage ratio (PCR) of 62 per cent. We expect on the back of declining provisioning expenses, net profit to increase at a CAGR of 37 per cent over FY16-18E.)