Prabhudas Lilladher’s research report on State Bank of India
SBI core earnings at Rs125bn beat estimates by 18% driven by higher NII and lower provisions. Adjusted NII at Rs346bn was higher by 6.3% led by better margins and loan growth. NIM was 3.18% (PLe 3.01%) while credit growth at ~21% YoY was ahead led by IBG (+30% YoY), large corporate (+21% YoY) and retail (+19% YoY). SBI expects credit momentum to continue and is targeting a loan growth of 14-16% in FY23 despite of slower deposit growth as it carries excess liquidity of Rs3.5trn. GNPA reduced QoQ by 35bps to 3.5% led by a sharp fall of 76% in slippages resulting in lower provisions and higher PAT.
Outlook
We raise FY23 earnings by ~15% due to lesser credit costs while increase FY24/23 PAT by ~5% each. We increase multiple from 1.4x to 1.6x on Sep’24 core ABV and raise SOTP based TP from Rs650 to Rs700. Retain BUY.
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