Target: ₹790

CMP: ₹575.70

While SBI always had the natural advantage of brand recognition and scale, the bank has gradually added other competitive moats in the form of a prolific sourcing edge, a YONO-powered digital stack, an unparalleled lean distribution model, and a potent combination of cross-sell focus and competencies.

Although we argue that the Q1-FY24 RoA (1.3 per cent) and RoE (>20 per cent) prints are exaggerated for regulatory forbearance (lower risk weights), lopsided pricing (lagged deposit repricing), and a benign credit cycle, we believe that the potent combination of traditional strengths and newly-added moats is reflecting in higher throughput, sustained efficiency gains (lean P&L), and high-quality new loan origination, translating into structurally lower credit costs and better return ratios.

SBI has extensively deployed pre-approved offers to its ETB customers (about 10 per cent of the personal loan disbursements are pre-approved), trimming the turnaround time on retail loans considerably, driving 16-18 per cent CAGR improvement in productivity metrics over the past few years.

We raise our two-year explicit period forecasts by 6-8 per cent each to factor in a superior asset profile and maintain BUY with a revised TP of ₹790 (earlier ₹750; standalone bank at 1.4x Mar-25 ABVPS).