Axis Securities has given a buy rating to SBI with a target price of Rs 250. The share price moved down by 4.20% in its previous close of RS 224.85. The stocks last traded price is Rs 215.40.

State Bank of India, incorporated in the year 1955, is a banking company (having a market cap of Rs 192503.87 crore).

Financials

For the quarter ended 30-06-2020, the company reported a Consolidated Interest Income of Rs 45711.40 crore, up 3.49% from last quarter Interest Income of Rs 44170.77 crore and up 1.18%from last year same quarter Interest Income of Rs 45177.78 crore. The bank reported net profit after tax of Rs 5203.49 crore in the latest quarter.

Investment Rationale

The brokerage believes key positive of SBI which will drive its performance are 

i)Being the largest bank in India the bank has business strengths making it a beneficiary of liquidity with huge deposit inflow during uncertain times resulting in lower-cost funds.

ii)Asset quality has improved on Book clean-up efforts over the last few years resulting in lower slippage and NPA decline.

iii)PCR has improved to 67%. Provisions for legacy stress is mostly over through Covid-19 may keep credit cost elevated.

iv) Subsidiaries' performance has been improving. SBI currently trades at <1x its FY22E core book value, which it believes is attractive. Among PSU banks, SBI remains the best play on the gradual recovery in the Indian economy, with a healthy PCR, robust capitalization, a strong liability franchise, and improved core operating profitability.

Promotors/FII Holdings

Promotors held a 57.6% stake in the company as of June 30, 2020, while FIIs held 11%, DIIs 13.8%, and public and others 17.5%.