Brokerage firm Motilal Oswal believes that due to strong jump in earnings and improvement in balance sheet, SBI shares may see a strong rally.
Stock Tips: Analysts of domestic brokerage firm Motilal Oswal have expressed the possibility of a rise in the shares of State Bank of India (SBI). The brokerage firm believes that due to strong jump in earnings and improvement in balance sheet, SBI shares may see a strong rally. The brokerage firm said, “The bank has strengthened its balance sheet and increased its PCR to ~88%. There can be a strong jump in its shares.
State Bank of India is the largest public sector bank in the country. SBI shares have gained more than 13% since the end of December. The brokerage firm believes that the shares of the company can see a jump of 32 percent. For this, a target price of Rs 675 has been fixed.
Asset quality has improved
SBI has improved its asset quality during the last few quarters. During the first quarter of the last financial year, SBI’s gross NPA stood at 5.4%, as against 4.9% in the previous quarter. The earnings of the bank are continuously improving. Motilal Oswal said, “SBI is one of the best Liability Franchisee. (CASA mix: ~46%) Also, lower cost of deposits will continue to support margins to a large extent.”
Subsidiary companies of State Bank of India such as SBI Mutual Fund, SBI Life Insurance, SBI Cards & Payment Services and SBI Cap have performed well over the years. Apart from Motilal Oswal, analysts at Edelweiss are also bullish on the stock. The brokerage firm has chosen State Bank of India as its preferred stock in the banking sector ahead of its quarterly results. The brokerage firm has given a buy rating to this stock with a target price of Rs 650.