Comments
Shares of State Bank Of India jumped as high as 6.7 per cent in intra-day deal on the BSE on Thursday as analysts turned more positive on the stock after the banking major reported a 52 per cent rise in its standalone net profit for the second quarter ended September 30.
The stock closed 5.6 per cent higher at ₹218.70 on the BSE. On the NSE, SBI November futures added 53.76 lakh shares in open interests and closed at ₹219.25 as against the spot close of ₹218.50.
On Wednesday, the PSU bank reported a standalone net profit of ₹4,574 crore (₹3,012 crore in the year-ago quarter), thanks to lower NPA provision and higher net interest income.
Broking firm Motilal Oswal Financial said that collection efficiency (CE) has recovered sharply to 97 per cent, in line with other large private lenders. “We believe the earnings normalisation cycle for SBIN has begun as the uncertainty brought about by the pandemic is receding significantly,” it added.
Said HDFC Securities, “While we have reduced our slippage and provisioning estimates, they remain conservative. Despite the recent AT-1 and Tier 2 capital raise, we believe it will be prudent for SBIN to raise equity capital.” SBI has one of the strongest deposit franchises and rules at inexpensive valuations, it further said. Large corporate banks have been on stress normalisation trajectory over the past couple of years with cautious underwriting and corporate deleveraging strategies, said Elara Securities and added, “With healthy collection efficiency reported by various lenders across segments, there seems to be reasonable optimism on a faster-than-expected return to normalcy.” It retained its Buy with a price target of ₹305.
“We believe the second half of Q3 will be a key period which will differentiate the quality of underwriting/underlying customer profile among lenders. However, in terms of stress, we expect mid-corporates/SMEs to show higher delinquencies than corporate/salaried retail. Consequently, we don’t see any material lumpy slippages that can dent SBIN’s core RoA improvement trajectory,” it added.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.