Shares of State Bank of India (SBI) on Monday climbed for the third straight session. The stock edged 0.17 per cent higher today to settle at Rs 545.35. The scrip has climbed 3.46 per cent in three days. At today’s closing value of Rs 545.35, SBI has lost 10.28 per cent in the past one month. That said, the counter has declined 11.33 per cent from its month-high level of Rs 615, BSE data showed.
The bank has announced its December quarter results, which analysts said beat Street expectations. The PSU lender reported a 68.47 per cent year-on-year (YoY) jump in net profit at Rs 14,205.34 crore for the December quarter compared with Rs 8,431.88 crore in the same quarter last year. Net interest income (NII) for the quarter rose 24.05 per cent YoY to Rs 38,069 crore from Rs 30,687 crore in the year-ago quarter. Net interest margin for the quarter came at 3.69 per cent, up 29 basis points (bps).
“Bank reported beat on all parameters driven by strong NIM expansion, traction in credit growth, better treasury performance (MTM reversal) and superior credit behaviour,” PhillipCapital said.
State-run banks, including the country’s largest lender (in terms of assets), were in the focus recently after US-based short seller Hindenburg Research alleged that the Indian conglomerate had engaged in stock manipulation and accounting fraud scheme over the last few decades. This forced the Reserve Bank to ask public sector banks to disclose their holdings in the Adani Group. Adani, however, refuted Hindenburg’s claim as baseless.
SBI chairman Dinesh Khara has said that the lender’s total exposure to Adani Group stood at 0.90 per cent of the overall loan book, which is around Rs 27,000 crore. The bank has no concerns so far regarding its exposure to the embattled Adani Group, he added. He also said that any further financing to the conglomerate’s projects would be “evaluated on its own merit”.
JP Morgan has placed an ‘Overweight’ stance on the counter with a 12-month target price of Rs 720.
Brokerages PhillipCapital, ICICI Securities and LKP Securities have given a ‘Buy’ call on the counter, suggesting a target of Rs 730, Rs 805, and Rs 663, respectively.
Technical analysts largely suggested that the stock looked ‘oversold’ with support seen at around Rs 519 level.
Osho Krishan, Senior Analyst – Technical & Derivative Research at Angel One, said, “SBI witnessed a substantial correction in the last week of the previous month. At present, the stock has recovered a bit and is hovering just near its 200-SMA on the daily chart, post the Q3 earnings. The stock is placed in the oversold region, suggesting a limited downside of the recent swing lows of the Rs 520-500 zone. On the higher end, Rs 565-575 is likely to act as stiff resistance and any breakthrough could only trigger some momentum. Meanwhile, the stock is likely to hover between the mentioned range.”
Pravesh Gour, Senior Technical Analyst at Swastika Investmart, said, “The primary uptrend of the counter has stopped for a while, and now it has retested its previous breakout level at around Rs 500, and again it starts a new leg of rallying towards Rs 580 level. The overall structure of the counter is favorable for investors as it closed above the 200-SMA moving average. On the upside, Rs 560 is the important psychological resistance level, above which we can expect the 580-plus levels in the near term. On the downside, Rs 499 is the major support level during any correction.”
AR Ramachandran from Tips2trades said, “SBI faces strong resistance at Rs 568 on the daily charts. A close above this level could be very bullish and lead to targets of Rs 605-630 in the near term. Support will be at Rs 519.”
The counter’s 14-day relative strength index (RSI) came at 37.68. A level below 30 is defined as oversold while a value above 70 is considered overbought. The lender’s stock has a price-to-equity (P/E) ratio of 11.41.
Meanwhile, Indian equity benchmarks fell sharply today, dragged by metals, technology and financials. The 30-share BSE Sensex pack declined 335 points or 0.55 per cent to close at 60,507; while the broader NSE Nifty index moved 89 points or 0.50 per cent down to settle at 17,765.
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