SBI shares surge as bank reports record quarterly profit: Is it time to buy?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The shares of State Bank of India (SBI) on Friday (May 10) rose over 1% following the announcement of its robust fourth-quarter results for the financial year 2023-24. The bank reported its highest-ever quarterly net profit of ₹20,698 crore for the fourth quarter.

The lender’s net profit posted a 24% surge compared to the same period last year.

Analysts’ projections, as per CNBC-TV18’s earlier poll, had suggested a contrasting scenario with an anticipated decline of 21.6%.

The actual profit not only surpassed expectations but exceeded them by over 20%.

Key metrics further underlined the bank’s robust performance.

SBI’s Net Interest Income (NII) stood at ₹41,656 crore, surpassing CNBC-TV18’s poll expectation of ₹40,887.5 crore.

Additionally, the lender exhibited its strongest asset quality in nine years, with a notable decrease in Gross Non-Performing Assets (NPA) by 2.9% and Net NPA by 6.1% quarter-on-quarter.

In light of this result, several brokerage firms have expressed bullish sentiments towards SBI’s stock.

Emkay Global retained a ‘buy’ rating on the stock and raised its SBI share price target to ₹950 apiece, citing a strong all-around performance in the fourth quarter.

Motilal Oswal maintained its ‘buy’ call on SBI, emphasising steady growth in revenues and robust asset quality, while projecting promising Return on Assets (RoA) and Return on Equity (RoE) figures for the future.

Nomura highlighted SBI as its top pick and raised its price target on the lender to ₹1,000.

Similarly, Kotak Institutional Equities revised its price target to ₹950, anticipating a relatively stable performance from SBI amid a favourable macroeconomic environment.

Jefferies maintained its ‘buy’ rating on the stock and raised its price target, indicating sustained confidence in SBI’s long-term growth prospects.

Despite the optimistic outlook, some analysts urge caution, noting that while SBI remains a top pick, sharp outperformance from current levels may not be imminent.

At the time of writing this report, SBI shares were trading 0.62% higher at ₹824.70 apiece on BSE.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow