What Should Investors Do With SBI Post-Quarter Results?

December 14th, 2022 | Updated on March 10th, 2023

State Bank of India, the biggest lender in the nation, disclosed on Wednesday that it raised Rs. 4,000 crores through tier-2 bonds at a cut-off rate of 7.57%.

According to the bank, the issuance had an overwhelmingly positive reaction from investors, with bids totaling Rs. 9,647 crores, roughly five times the initial issue amount of Rs. 2,000 crores.

According to SBI, the bonds have a 15-year term with a 10-year call option. The instruments are rated AAA (stable) by credit rating agencies.

On September 7, the public sector bank issued extra tier-1 bonds for Rs. 6,872 crores at a cut-off rate of 7.75%, the lowest AT-1 bond issuance rate for any bank during that time of the current fiscal year.

SBI’s board had authorized plans to raise Rs. 11,000 crores via new tier-I and tier-II bonds to satisfy regulatory requirements and promote business expansion in late July.

Quarterly Result Q1 FY23

Following the June quarter results, most brokerage companies kept the SBI at the same rating level due to the bank’s excellent loan growth and consistent asset quality. In response to the findings, the SBI share price dropped more than 2% in the early session.
The size of the bank’s balance sheet exceeds Rs. 50 lakh crore.
Experts advised long-term investors to purchase the SBI Share now or on dips with a potential objective of over Rs. 600-650 in the following 12 months, which amounts to an increase of over 13-22% from Rs 530 reported on August 5.
The bank had an Rs. 6,549 crore loss on its investments due to the decline in value during the quarter, causing the net profit to drop to Rs. 6,068 crore in the quarter that ended June 2022 from Rs. 6,504 crore a year earlier.
The bank reported an excellent loan increase of 16% Year on Year, driven by tremendous growth in the retail segment of 19% YoY on the back of robust growth in house loans and personal loans.
With Gross Non-Performing Asset & Net Non-Performing Asset ratios declining by 6s bps/2 bps Quarter on Quarter to 3.91%/1.0%, overall asset quality remained constant. PCR stability at 75%.

Conclusion

The bank is in a better position to gain from the revival of the economy. Concerning asset quality, capitalization, and underwriting capabilities, we perceive the SBI share price to be in a superior position.

We anticipate the bank’s NII (net interest income) and profitability to recover over the next two to three years with the support of more significant margins thanks to its business strengths (being the largest bank in India).

We anticipate that the bank will gain from improving the favorable corporate lending cycle.
We retain a Buy recommendation on the SBI share price and a Rs. 650 SOTP-based (sum-of-the-parts) price objective.

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