Among PSU banks, State Bank of India (SBI) remains the best play on the gradual recovery of the Indian economy given the bank’s healthy PCR, strong capitalisation, a strong liability franchise and an improved asset quality outlook, highlights the domestic brokerage Is. House Axis Securities.
“We believe credit costs normalize and improved operating performance will lead to double-digit ROE of +15% in FY22-24E,” the note said. Brokerage maintains its buy rating SBI sharesand has recommended as its Top Stock Pick for the month of April 2022 with a target price of 720 shares.
State Bank of India (SBIN) is the largest public sector bank in terms of assets, deposits, branches, number of customers and employees and also has a pan-India presence.
“We believe SBIN’s unsecured lending profile is strong with >90% salaried government employees. Retail book traction remains healthy at around 15%. While this is supported by Home Loans and Express Credit, more in the coming quarters There is a possibility of improvement,” Axis Securities said.
In addition, the bank has a market share of over 20% in home loans and auto loans. According to the brokerage, with the formation of stress, recovery from old NPAs and broad-based growth in the loan book, the RoA of the bank is expected to recover to a historical range of 0.7%-1% after a 6-year down-cycle. ,
“Apart from core banking, SBI’s subsidiaries are expected to add more value. The bank has a strong presence in various financial services operations such as credit cards, insurance (life and general), asset management, pension funds, investment banking, institutional and retail broking. Most of these financial services are generating stable returns and support the overall performance of the bank,” said the note from Axis Securities.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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