SBI share price soars 5%; brokerage target prices show stock may nearly double

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June 8, 2020 1:37 PM

SBI share price has risen 13.5 per cent from Rs 174.05 to today's intraday high in just three trading days. However, SBI shares have rallied 32 per cent from its 52-week low of Rs 149.55

SBI share price, SBI sharesDespite today’s gain in the stock, SBI shares are still 47 per cent off from its 52-week high level of Rs 373.70 apiece

State Bank of India (SBI) share price surged over 5 per cent to day’s high of Rs 197.70 apiece on BSE. Most of the brokerages have cut their target price but are still upbeat on the stock with a ‘buy’ rating and see upside of nearly 80 per cent after the bank reported a four-fold jump in the standalone net profit at Rs 3,580.81 crore in the quarter ended March 31. SBI share price has risen 13.5 per cent from Rs 174.05 to today’s intraday high in just three trading days. However, SBI shares have rallied 32 per cent from its 52-week low of Rs 149.55. “Strong position on liquidity with a high retail deposit base should enable the bank to navigate the current situation and maint NIMs. Further subsidiary valuations being nearly 53% of current capital base enables bank to increase capital adequacy by selling a stake in subsidiaries without diluting at current valuations,” brokerage firm Ambit said in its research report.

From current levels, the stock will have to jump 78% to touch the target price of Rs 336 pegged by Ambit. The brokerage firm cut the target price estimate from Rs 348 earlier to Rs 336. Despite today’s gain in the stock, SBI shares are still 47 per cent off from its 52-week high level of Rs 373.70 apiece. SBI registered a growth of 327 per cent in January-March net profit from Rs 838.4 crore clocked in the corresponding period of the preceding financial year. “The moratorium percentage is unusually low (vs. peers) and the related disclosures were ambiguous. Further, COVID-19 related provisions (Rs 9.4bn) appear low, in context of those made by peers as well as SBI’s asset quality track record,” HDFC Securities said in its latest research report. The brokerage firm has reduced earnings to factor in higher provisions. It has cut its price target to Rs 270 from Rs 316 earlier. “The term of SBI’s current chairman is set to end in Oct-20, this creates additional uncertainty,” it added. HDFC Securities has given a price target of Rs 270, a 43.76 per cent upside would be needed to take it to levels predicted by HDFC Securities.

In accordance with a circular issued by the Reserve Bank of India (RBI), dated April 17, in relation to restricting dividend payout, the bank has not proposed any dividend for the year ended March 31, 2020. “The proportion of the moratorium book also stands lower than most peers, aided by higher exposure to salaried (government and PSU) employees. This would enable it to maintain strong control over credit cost as the impact of COVID-19 becomes visible in 2HFY21,” Motilal Oswal said in its research report. The brokerage firm has given a ‘buy’ rating to stock, with an upside of 49 per cent. “We cut our estimates for FY21/FY22 by 17%/16% as we build-in a slight moderation in margins/fee income and higher credit cost,” it added. 

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