CLSA has maintained its “outperform” rating on shares of SBI with a price target of ₹1,275, which is 23.2% higher than the stock’s closing price on Wednesday, and also higher than the previous record high of ₹1,234.7.
CLSA met the management of SBI and highlighted the key takeaways from the same:
First, SBI’s loan growth has been robust for the system, driven by both retail and corporate demand.
SBI has guided for credit growth to be between 13% to 15% for financial year 2027, stating that it will be broad-based across segments. Chairman CS Setty said that there is no stress seen on account of the West Asia conflict.
Despite the pressure on the lender’s margins in the fourth quarter, Setty said that there is no concern on managing them and that the 3% guidance for the new financial year remains intact.
CLSA alluded to this as well in its note, citing the management stating that the margin guidance could be achieved through the repricing of the Treasury Bill-linked loans.
Second, the lender is tactical on corporate lending side, as it aims to deliver profitable growth.
CLSA said the recent boost by the Reserve Bank of India (RBI) on foreign currnency non-resident (bank) (FCNR (B) deposits will boost system liquidity, though it may not make a big difference to SBI, it said.
The lender’s asset quality remans strong despite macro issues on the geopolitical front, CLSA said, adding that the only area where the management of SBI is worried about, is El Nino, warning that rural demand could be hampered if the monsoons are notably below average.
Union Agriculture Minister Shivraj Singh Chouhan also said earlier this week that weak monsoons could impact the Kharif crop. He went on to say that an estimated 315 districts could receive less rainfall during the season.
SBI is one among the few Nifty 50 stocks that do not have a “sell” recommendation among the analysts who track the stock. 49 analysts have coverage on SBI, of which 43 have a “buy” rating, while six others say “hold.”
Shares of State Bank of India are trading 1.5% higher on Thursday at ₹1,050. The stock is up 6.6% so far this year.
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