9.1 C
New York
Sunday, May 9, 2021

SBI is a deep value opportunity, says CLSA

Must read

IDFC First Bank Q4 Results: Profit jumps 78% to Rs 128 crore

Total income during the fourth quarter rose to Rs 4,834 crore as against Rs 4,576 crore during the same period of FY20, IDFC First...

Reliance Capital Q4 Results: Loss narrows to Rs 1,649 crore

On a standalone basis, Reliance Capital posted a loss of Rs 3,865 crore as against Rs 2,501 crore at the end of same quarter...

MUMBAI: CLSA has raised target price on State Bank of India to Rs 310 from Rs 270 and retained buy rating saying that it is a deep value opportunity. Here are the top 5 reasons to buy SBI‘s stock, according to CLSA:

1) Asset quality

CLSA said the bank is relatively better

positioned on asset quality post-Covid-19, driven by high government/PSU share in loan book. This has led to better-than-expected

morat-2 performance and drives management comfort on current CET-1, said CLSA.

2) Market share

CLSA said SBI is government-owned and this reflects in sticky cost ratios and faster monetary transmission. Unlike peer PSU banks that have lost share to private banks, SBI has gained or maintained share in retail assets, CASA, overall loans, and deposits through the last decade, leading to more than a 10 per cent CAGR in core pre-provision operating profit in the past five to ten years, said CLSA.

3) Balancing national/minority interest

CLSA said the bailout of YES Bank shows the ability of the government and SBI to balance national interest versus minority interest.

4) Best-in-class subsidiaries

All SBI subsidiaries have compounded by a 25-40 per cent rate over the last three to five years and have become market leaders, driven by SBI’s distribution strength, said CLSA. Subsidiaries’ contribution also ensures that capital raising is not book-dilutive like other PSUs, said CLSA.

5) Undemanding valuations

CLSA said that current valuations are undemanding at 0.3 times June-2022 book and that return on equity is likely to normalize to more than 10-11 per cent post Covid-19.

- Advertisement -

Latest article

IDFC First Bank Q4 Results: Profit jumps 78% to Rs 128 crore

Total income during the fourth quarter rose to Rs 4,834 crore as against Rs 4,576 crore during the same period of FY20, IDFC First...

Reliance Capital Q4 Results: Loss narrows to Rs 1,649 crore

On a standalone basis, Reliance Capital posted a loss of Rs 3,865 crore as against Rs 2,501 crore at the end of same quarter...

HDFC to off-load 0.62% stake in general insurance subsidiary

HDFC has entered into a share purchase agreement for sale of 44,12,000 equity shares of Rs 10 each, representing 0.62 per cent of the...