India's largest public sector bank, State Bank of India (SBI), achieved yet another milestone on Wednesday, as the stock crossed ₹5-lakh-crore market capitalisation mark for the first time since its listing on exchanges on March 1, 1995.
Banking stocks led a strong recovery in the overall market that helped Sensex and Nifty stay firm, despite global markets going into a tailspin following stricter-than-expected US inflation. Both benchmarks turned green, thanks to a sharp rise in share prices in stocks such as IndusInd Bank, SBI, Kotak Mahindra Bank, ICICI Bank, HDFC Bank, Bajaj Finserv, Bajaj Finance and Axis Bank.
Third bank to hit milestone
As SBI jumped nearly 3 per cent to hit an all-time high of ₹574.75 on the BSE, market capitalisation of the stock hit ₹5.10-lakh-crore.
SBI has become the third bank to surpass ₹5-lakh crore market-cap behind HDFC Bank and ICICI Bank.
SBI now ranks the seventh most-valued Indian company in terms of market capitalisation. Reliance Industries tops the list with ₹ 17.61-lakh crore, followed by Tata Consultancy Services (₹ 11.44-lakh crore), HDFC Bank (₹ 8.52-lakh crore) , Infosys (₹ 6.21-lakh crore), ICICI Bank (₹ 6.40-lakh crore) and Hindustan Unilever (₹ 6.07-lakh crore).
FPIs turn buyers in banking sector
Most analysts are bullish on the Indian financial segment, especially banks. FPIs, who remained net sellers in the segment, have already turned positive in the last two months and started investing in the sector. After remaining sellers for nine months in the banking and financial services equities, foreign investors have turned net buyers in the sector and invested nearly ₹14,000 crore.
In a recent report, JM Financial said: "We believe SBI should deliver: healthy core-PPOP growth in FY23/FY24 (21 per cent CAGR over FY22-24) led by a gradual improvement in NIMs; lower credit costs (0.7 per cent/0.8 per cent in FY23/FY24; and strong loan growth of 16 per cent over FY22-24."
Morgan Stanley has retained its “Overweight” stance on SBI with a price target of ₹675, as the global investment advisory firm expects its loan growth momentum to remain strong. While it expects margin improvement from Q2-FY23, it does not see fund raising through equity capital.
Experts also believe SBI would outperform benchmarks in the short term. The stock of SBI is up nearly 23 per cent year-to-date as against Nifty and Sensex return of 4 per cent.
"We see continued outperformance (25 per cent/13 per cent vs. Nifty over one year/six months), given that it is a key beneficiary of the uptick in systemic credit growth," JM Financial with a target price of ₹600.