Strong Buy SBIN cmp 622, Target 670++ within 3-5 trade sessions.
State Bank of India is a Fortune 500 company. It is an Indian Multinational, Public Sector banking and financial services statutory body headquartered in Mumbai. It is the largest and oldest bank in India with over 200 years of history.
Branch Network
Presently, the bank operates a network of 22,219 branches and 62617 ATMs across India. It also operates 71,968 business correspondent outlets across India.
Market Share
The bank has a market share of 22.84% in deposits and 19.69% share in advances in India. It has a strong customer base of 45 crore customers.
Loan Book
Retail loans account for 39% of the loan book, followed by corporate (37%), SME (14%) and Agriculture (10%). The bank has a well-diversified loan book exposed to various sectors. Top sectors include home loans (23%), infrastructure (15%), services (12%) and agriculture (10%). 75% of the corporate advances are rated A and better ratings from rating agencies. 38% of the corporate book accounts for PSUs & Govt. departments.
International Business
The bank has a global footprint with a network of 233 branches/offices in 32 countries. It has presence in USA, Canada, Brazil, Russia, Germany, France, Turkey, Australia, Bangladesh, Nepal, Sri Lanka and other countries. Presently, Overseas business accounts for 3% of total deposits and 13% of total advances.
Government Business
SBI has always been the banker of choice to the government of India and is the market leader in government business. It had turnover of 52,50,000 lakh crores and commissions of 3,700 crores from government business in FY20.
Financial Inclusion Business
The bank has 71,000 BC outlets which has primary focus on financial inclusion customers. The bank accounts for 40% of all PMJDY accounts i.e. more than 12 crore accounts. Presently, the deposits from PMJDY accounts are 42,500 crores i.e. 1.2% of total deposits of the bank.
Digital Metrics
Increasing digitization resulted in 40% of asset accounts and 60% of liability customers added via digital channels in FY21.
Subsidiaries Operations
The bank owns various subsidiaries which are engaged in related business activities :-
1. SBI Capital Markets Ltd (100% stake)
2. SBI DHFI Ltd (72% stake)
3. SBI Cards and Payment Services Ltd (69% stake)
4. SBI Life Insurance Co. Ltd (57.6% stake)
5. SBI Funds Management Pvt Ltd (63% stake)
6. SBI General Insurance Company Ltd (70% stake)
KEY Ratios (Q1FY24)
Capital Adequacy Ratio - 14.50%
Net Interest Margin - 3.34%
Gross NPA - 4.77%
Net NPA - 1.23%
CASA Ratio - 45.15%
Book Value ₹ 402
Price to book value 1.55
Bank's performance:
Quarterly net profit of 14,330 crores.
Operating profit for Q2FY24 at 19,417 crores.
RoA for H1FY24 at 1.10%.
RoE for H1FY24 at 22.57%.
Net interest income increased by 12.27% YoY.
Non-interest income increased by 21.59% YoY.
Credit growth:
Domestic advances grew by 13.21%.
Driven by SME advances, retail personal advances, and agri advances.
Corporate segment advances grew by 6.62%.
Asset quality:
Gross NPA ratio improved by 97 bps YoY to 2.55%.
Net NPA ratio improved by 16 bps to 0.64%.
PCR improved by 39 bps YoY to 91.93%.
Future outlook:
Credit and deposit growth expected to be around 16-17% in FY24.
Margins may see a slight compression of 3-5 bps due to increased deposit rates.
Aims to maintain credit growth momentum by disbursing pending loans and converting proposals into sanctions.
SME loans:
Witnessed healthy growth in SME book.
Initiatives taken to improve infrastructure for SME lending.
Expects to reach target of 4 trillion in SME loans by FY24.
Unsecured loans:
Unsecured loan portfolio, including Xpress Credit, has a low GNPA ratio of 0.69%.
Resilient in terms of asset quality.
Digital initiatives:
Increased traction in cross-selling business through YONO.
Sourced 61% of savings bank accounts digitally.
Launched "YONO for Every Indian" and witnessed growth in digital loan portfolio.
Capital adequacy:
Well capitalized with a capital adequacy ratio of 14.28% and CET-1 ratio of 9.94% which is well above regulatory requirements. Expects CET-1 ratio to improve further with ploughing back of profits.
Conclusion:
SBIN stock price has given a breakout multiple times along with the strong volumes and today it has retested the breakout zone, which is a strong buying point for a minimum target of 670 in 3-5 trading sessions. Fundamentally, stock can has an intrinsic valuation of Rs.800 so there is an enough cushion and momentum on upside.
Branch Network
Presently, the bank operates a network of 22,219 branches and 62617 ATMs across India. It also operates 71,968 business correspondent outlets across India.
Market Share
The bank has a market share of 22.84% in deposits and 19.69% share in advances in India. It has a strong customer base of 45 crore customers.
Loan Book
Retail loans account for 39% of the loan book, followed by corporate (37%), SME (14%) and Agriculture (10%). The bank has a well-diversified loan book exposed to various sectors. Top sectors include home loans (23%), infrastructure (15%), services (12%) and agriculture (10%). 75% of the corporate advances are rated A and better ratings from rating agencies. 38% of the corporate book accounts for PSUs & Govt. departments.
International Business
The bank has a global footprint with a network of 233 branches/offices in 32 countries. It has presence in USA, Canada, Brazil, Russia, Germany, France, Turkey, Australia, Bangladesh, Nepal, Sri Lanka and other countries. Presently, Overseas business accounts for 3% of total deposits and 13% of total advances.
Government Business
SBI has always been the banker of choice to the government of India and is the market leader in government business. It had turnover of 52,50,000 lakh crores and commissions of 3,700 crores from government business in FY20.
Financial Inclusion Business
The bank has 71,000 BC outlets which has primary focus on financial inclusion customers. The bank accounts for 40% of all PMJDY accounts i.e. more than 12 crore accounts. Presently, the deposits from PMJDY accounts are 42,500 crores i.e. 1.2% of total deposits of the bank.
Digital Metrics
Increasing digitization resulted in 40% of asset accounts and 60% of liability customers added via digital channels in FY21.
Subsidiaries Operations
The bank owns various subsidiaries which are engaged in related business activities :-
1. SBI Capital Markets Ltd (100% stake)
2. SBI DHFI Ltd (72% stake)
3. SBI Cards and Payment Services Ltd (69% stake)
4. SBI Life Insurance Co. Ltd (57.6% stake)
5. SBI Funds Management Pvt Ltd (63% stake)
6. SBI General Insurance Company Ltd (70% stake)
KEY Ratios (Q1FY24)
Capital Adequacy Ratio - 14.50%
Net Interest Margin - 3.34%
Gross NPA - 4.77%
Net NPA - 1.23%
CASA Ratio - 45.15%
Book Value ₹ 402
Price to book value 1.55
Bank's performance:
Quarterly net profit of 14,330 crores.
Operating profit for Q2FY24 at 19,417 crores.
RoA for H1FY24 at 1.10%.
RoE for H1FY24 at 22.57%.
Net interest income increased by 12.27% YoY.
Non-interest income increased by 21.59% YoY.
Credit growth:
Domestic advances grew by 13.21%.
Driven by SME advances, retail personal advances, and agri advances.
Corporate segment advances grew by 6.62%.
Asset quality:
Gross NPA ratio improved by 97 bps YoY to 2.55%.
Net NPA ratio improved by 16 bps to 0.64%.
PCR improved by 39 bps YoY to 91.93%.
Future outlook:
Credit and deposit growth expected to be around 16-17% in FY24.
Margins may see a slight compression of 3-5 bps due to increased deposit rates.
Aims to maintain credit growth momentum by disbursing pending loans and converting proposals into sanctions.
SME loans:
Witnessed healthy growth in SME book.
Initiatives taken to improve infrastructure for SME lending.
Expects to reach target of 4 trillion in SME loans by FY24.
Unsecured loans:
Unsecured loan portfolio, including Xpress Credit, has a low GNPA ratio of 0.69%.
Resilient in terms of asset quality.
Digital initiatives:
Increased traction in cross-selling business through YONO.
Sourced 61% of savings bank accounts digitally.
Launched "YONO for Every Indian" and witnessed growth in digital loan portfolio.
Capital adequacy:
Well capitalized with a capital adequacy ratio of 14.28% and CET-1 ratio of 9.94% which is well above regulatory requirements. Expects CET-1 ratio to improve further with ploughing back of profits.
Conclusion:
SBIN stock price has given a breakout multiple times along with the strong volumes and today it has retested the breakout zone, which is a strong buying point for a minimum target of 670 in 3-5 trading sessions. Fundamentally, stock can has an intrinsic valuation of Rs.800 so there is an enough cushion and momentum on upside.
Trade closed manually:
SBI was given for a very short term time frame. After our buy call, the stock went to 646 and due to Hdfcbank crash, the SBI went down to a low of 603 and now bounced back to 640 again. Since the holding period exceeded the timeframe, we are exiting this stock at small profit. Profit booking range 635-645 range.