Shares of State Bank of India Ltd (SBI) rose sharply in Friday’s trade a day after news agency Reuters, citing sources, reported that the state-run lender may lower its stake in Yes Bank after a lock-in period, ending March 13, 2023. The stock today jumped 5.66 per cent to hit a day high of Rs 564 over its previous close of Rs 533.80.
Around 15.11 lakh shares changed hands today on BSE, which was thrice the two-week average volume of 4.83 lakh shares. Turnover on the counter stood at Rs 83.94 crore, commanding a market capitalisation (m-cap) of Rs 5,01,920.18 crore. There were 3,78,336 sell orders against buy orders of 2,52,027 shares.
The three-year lock-in period was put in place by Reserve Bank of India (RBI). SBI, along with other lenders such as ICICI Bank Ltd, Axis Bank Ltd, IDFC FIRST Bank Ltd, Kotak Mahindra Bank Ltd and HDFC Ltd had stepped in to rescue Yes Bank in March 2020, after the central bank superseded the bank’s board.
The SBI board is likely to meet soon to decide on the future of its stake in Yes Bank, following which a proposal will be sent to RBI, Reuters further mentioned.
Brokerages are largely ‘positive’ on the counter. For SBI, Axis Securities has suggested a target price of Rs 750 in the coming months, while adding that a lower-than-expected recovery cycle and a slowdown in credit growth remain key concerns for the state-run lender.
Kotak Institutional Equities has assigned a ‘Buy’ call on the counter and pegged it at a fair value of Rs 725. Sharekhan by BNP Paribas also has a ‘Buy’ call with a target price of Rs 710.
“We’ve increased our FY2023E/24E earnings estimates factoring in margin improvement,” the brokerage noted.
In addition, Prabhudas Lilladher has maintained a ‘Buy’ rating on the scrip for a target of Rs 730.
Commenting on the state-owned banking sector, Parth Nyati, Founder of Tradingo, said, “PSU banks will continue to do well since they are fundamentally in a much healthier stage and the prognosis is still positive. In terms of the Nifty PSE index, it is poised for a multiyear breakout, and if it occurs, we can anticipate a significant outperformance in the PSU sector over the course of the next few months”
SBI has an average target price of Rs 706.54, Trendlyne data showed, suggesting a potential upside of 25.89 per cent. The scrip has a one-year beta of 1.11, indicating high volatility.
The stock was last seen trading higher than 5-day, 20- and 200-day moving averages but lower than 50-day and 100-day moving averages. The counter’s 14-day relative strength index (RSI) came at 58.35. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company’s stock has a price-to-equity (P/E) ratio of 11.17. The earnings per share (EPS) of the firm came at 47.79, higher than the P/E ratio.
Meanwhile, Indian equity benchmarks returned to positive territory in afternoon deals today, led by gains in banks, metals, financials and energy stocks.
(With inputs from Reuters)
Also read: YES Bank 3-year lock-in period ends soon: Returns that SBI, others made on their investments
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