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On Monday, the scrip had 32 'strong buy' calls, five buy recommendations and one hold call, as per Trendlyne. The average target price on the stock, based on 38 analyst recommendations, stands at Rs 638.69, suggesting a 15.5 per cent potential upside.
According to JM Financial, SBI is currently trading at 1.2 times forward one-year PBV for the core banking business. It sees greater probability of the bank stock trading closer to 1-SD (standard deviation) above its long-term valuation average as witnessed in FY11-13. It values the core banking business at 1.3 times FY24E PBV against 1 time at present to arrive at a target of Rs 660.
It sees SBI delivering healthy core-PPOP growth of 21 per cent CAGR over FY22-24E led by a gradual improvement in NIMs, lower credit costs and strong loan growth of 16 per cent over FY22-24E.
"We see continued outperformance (25 per cent/13 per cent against Nifty50 over 1 year/6 months) given that it is a key beneficiary of the uptick in systemic credit growth. SBI has protected its asset/liability market share over the last 5 years and with increasing signs of stronger corporate credit demand emerging, we see SBI as one of the best-placed banks to ride the upturn. Incrementally, as repo rate hikes percolate through asset mix beginning Q2FY23, we see concerns on NIMs abating given that SBI continues to hold its healthy SA pricing and trajectory on deposit growth improves," it said on Monday.
The stock traded 0.23 per cent higher at Rs 554.70 on BSE. In its base case, to which Morgan Stanley (MS) gives a 100 per cent probability, SBI is seen at Rs 675.
This target assumes continued macro recovery but some impact from higher commodity prices. Loan growth is seen at 13 per cent for FY23 and 15 per cent for FY24, it said.
"Margins should remain stable in FY23 and then improve by 10 bps in F24 to 3.2 per cent against 3.1 per cent in FY22. Slippages and credit costs should remain at normalised levels - we expect credit costs at 74bp/83bp in F23/F24 against 87 bps in FY22," MS said last week.
Amongst PSU banks, said Axis Securities, SBI remains the best play on the gradual recovery of the Indian economy on account of its healthy provision coverage ratio, robust capitalisation, strong liability franchise, and an improved asset quality outlook.
"We believe normalization in credit costs and improved growth outlook should lead to double-digit ROEs of 14.5 per cent over FY23-24. In this backdrop, we maintain a BUY rating on the stock with a target price of Rs 665/share (SOTP basis core book at 1.3 times FY24E and subsidiaries at Rs 190)," it said in its September strategy note.
Technical View
Technically, the stock is trading above most of the short- and long-term moving averages including 5-,10-,30-,50-,100- and 200-DMA which is a positive sign for the bulls.
“SBI has been trading in the Rs 420 to Rs 550 range for the last nine months and has finally come out of this consolidation. On a smaller period, SBI has been trading in the Rs 510 to Rs 540 range since last one month,” Gaurav Bissa, VP, InCred Equities, said.
The stock has seen a range breakout on multiple time periods and looks set for a strong upside in coming weeks, Bissa said. He recommended traders to buy the stock for a target of Rs 605 with a time horizon of 4-6 weeks, and to keep a stop loss below Rs 525.
Nooresh Merani, www.nooreshtech.co.in told ET NOW that SBI looks set for further momentum. "Given that we have already moved up quite a bit across the board, place a strict stop loss at Rs 540 for a target price of Rs 590."
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
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(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price