Broker’s call: SBI (Buy)

Target: ₹1,050

CMP: ₹835.25

State Bank of India has delivered a strong all-round performance for the past few years and has achieved new milestones in profitability (PAT surpassed ₹60,000 crore in FY24). The bank has demonstrated considerable improvements in underwriting standards, while the consistent strengthening of its balance sheet has brought NPAs to pristine levels.

In terms of returns, SBI has delivered a 34 per cent CAGR over the past two years, with its market cap swelling to $89 billion. Our assessment of large global banks shows that SBI has delivered the best-in-class RoE and loan growth among large global banks.

During FY22-24, SBIN has delivered a 16 per cent CAGR in loans, outperforming many large peers. Interestingly, the current size of SBIN’s balance sheet at ₹62-lakh crore is more than the GDP of almost 174 countries in the world. We reckon that this gap is only going to widen as SBIN delivers steady growth going ahead. SBI has demonstrated high agility and superior execution even at this huge size and is well poised to maintain this momentum.

A strong liability profile, an enviable CD ratio and robust tech capabilities position SBI well to capitalise on growth opportunities as a stable policy environment and continued reforms continue to bolster overall economic activity.