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Shares of State Bank of India (SBI) extended gains on Monday, rising 5.3 per cent, as the lender reported a surge in its March quarter net profit to Rs 3,580.81 from Rs 838.4 in year-ago period.
At 01:05 pm, shares traded at Rs 193.10, up 2.8 per cent from its previous close, while the benchmark Sensex was up 1.3 per cent at 34751.17. The stock had risen 8 per cent on Friday. Total income at the lender rose 0.4 per cent to Rs 76,027.51 crore in the quarter under review.
Motilal Oswal believes said, ‘SBI has prudently improved provision coverage ratio over the last few years and has one of the lowest stressed assets among the corporate banks. The proportion of the moratorium book also stands lower than most peers, aided by higher exposure to salaried government and PSU employees.’ Slippages stood at a four-quarter low, aided by the Reserve Bank of India’s dispensation, resulting in improved asset quality ratios. This would enable it to maintain strong control over credit cost as the impact of covid-19 becomes visible in second half of FY 2021, the brokerage firm added. It also has a buy rating on the stock.
HDFC Securities said, ‘Asset quality improved, even if one adjusts for the standstill classification impact, but this improvement was aided by higher with outstandings. The moratorium percentage is unusually low against peers and the related disclosures were ambiguous. With current valuations and a strong deposit it is trading at 0.75 times FY2022E of the absolute book value.’ The brokerage has a buy rating on the stock.
