SBI shares surged nearly 3 percent, touching an intraday high of ₹804.35 on the National Stock Exchange after global brokerage Nomura said State Bank of India shares could gain nearly a quarter to ₹1,009.
The Nomura analysts are suggesting an investment in SBI stock. They have set their price target for the shares of SBI to ₹ 980 per share. At around noon, the SBI stocks traded with an increase of 2.05 percent to ₹ 797.45. The stock has gained about over 4 percent in the last couple of days.
In its recent report, Nomura has been highlighted to be an outright winner in terms of asset quality, as it reflected lesser exposure of the bank to ‘problematic’ segments and a robust track record in retail underwriting. The report said, “SBI has the lowest domestic loan-to-deposit ratio (LDR) among large banks, supported by one of the strongest deposit franchises, and thus faces no imminent supply-led pressures on growth.”
SBI continued to manage stable asset quality for analysts at Nomura. They cited, “SBI’s unsecured personal loans are largely issued to salaried government employees and have been fairly robust through various business cycles. Corporate credit quality remains robust, although it may be sensitive to some short-term volatility.”
On RBI’s potential interest rate cuts, the report noted that an RBI rate cut of 50 basis points may shave a negligible 12 basis points on the net interest margin of SBI. They noted, however, that this effect could be even lesser given the recent hikes in the marginal cost of funds-based lending rate (MCLR) by 30 basis points in the first half of the fiscal year 2025. Following the RBI’s meeting, the repo rate stayed at 6.5 percent, though the central bank indicated a shift towards a ‘neutral’ monetary policy stance.
SBI shares have returned over 25% during the calendar year 2024, and it surpasses the benchmark Sensex, which has rallied by 13.38% over the very same period.
SBI is a state-owned institution, and thus it holds a significant share of total deposits and credit in the banking sector. Besides consumer and commercial lending business, SBI has diversified its business by stepping into insurance products, including both life and general insurance; asset management; and factoring services through several subsidiaries and associate companies.
