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Post SBI’s Dismal Q1: Shares Drop But Brokerages Still Bullish, Upto 28% Upside

Stock Markets Aug 08, 2022 07:15
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By Malvika Gurung

Investing.com -- Shares of the country’s largest public sector bank State Bank of India (NS:SBI) declined 3% on Monday, ending the session 2.06% lower at Rs 520.1 apiece, following an unenthusiastic earnings result for June 2022 quarter.

The lender’s net profit dipped 6.7% YoY to Rs 6,068 crore in Q1 FY23, missing the Street’s forecast by a huge margin, due to treasury losses. The mark-to-market (MTM) losses totalled Rs 6,549 crore, pulling down the non-interest income for the quarter.

The hit on MTM also adversely impacted the lender’s ROA and ROE. However, the asset quality remained stable in the Apr-Jun period and credit growth YoY stood at around 14.93%.

Read Also: SBI Q1 - Net Profit Widely Misses Net Profit; Asset Quality, Credit Growth & More

Most brokerages remained bullish on the stock and maintained their ratings despite a fall in quarterly net profit, backed by an improving asset quality and healthy loan growth.

Macquarie has an outperform call on the stock with a target price of Rs 665/share, depicting an upside of 27.9% compared to Monday’s closing price, given a strong growth in retail loans which will drive credit growth.

Jefferies expects the MTM losses which weighed on the profitability, to settle now, while holding its Buy call on the stock with a target price of Rs 630/share.

Prabhudas Lilladher sees a better outlook on corporate, as the lender expects credit momentum to continue in FY23, with a target of 12% YoY loan growth pegged in the year. It retains a Buy call and a TP of Rs 600/share.

Experts suggest long-term investors buy the stock now or on dips for a target of Rs 600-650 over the year, stated an ET report.

Post SBI’s Dismal Q1: Shares Drop But Brokerages Still Bullish, Upto 28% Upside
 

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