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SBI Shares Jump to a Record High After Trade Analysts Raise Earnings Estimates

A man checks his mobile phone in front of State Bank of India (SBI) branch in Kolkata. (File photo/Reuters)

A man checks his mobile phone in front of State Bank of India (SBI) branch in Kolkata. (File photo/Reuters)

According to trade analysts, the rise in the largest Indian commercial bank is attributed to the bank’s third quarter sequential numbers, which have been very impressive and beyond expectations.

The country's largest lender State Bank of India (SBI)'s shares on February 5 surged by a whopping 10 percent in the intraday trade session after the strong sequential quarterly numbers of the bank. After the stock market opening bell, SBI’s stock is up for the fifth straight day and has gained close to 40 percent during this period to an all-time high of Rs 390.6 from a Thursday close of Rs 355.10.

According to trade analysts, the rise in the largest Indian commercial bank is attributed to the bank’s third quarter sequential numbers, which have been very impressive and beyond expectations. They also said that during the recent stock market rebound, the bank’s share price was underperforming. However, after strong quarterly numbers were announced, they do expect momentum in SBI stock price. In the long-term perspective, they are also anticipating SBI’s stock price to hit Rs 460.

According to a Bloomberg report, analysts have now raised earnings estimates and target prices for SBI and expect a further rerating on account of its lower slippages, fall in credit costs and attractive valuations.

However, India’s largest lender also saw its net profit decline by 7 percent YoY to Rs 5,196 crore in the quarter ended inDecember. While, its net interest income rose by 4 percent,the bank had posted a net profit of Rs 5,583.36 crore in the same period a year ago.

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While the SBI’s proforma gross non-performing assets (NPA) stood at 5.44 percent against 5.88 percent in the aforementioned period, it reported slippages worth Rs 2,073 crore, which were not classified as NPA owing to a Supreme Court order.

The report also quoted SBI Chairman Dinesh Kumar Khara saying, "Our provision coverage ratio is more than 90% so we do not expect any large provisions to be made against these assets in the future."

In value terms, the gross NPAs stood at Rs 1,17,244.23 crore, as against Rs 1,59,661.19 crore, whiletotal provisions rose 43% year-on-year to Rs 10,324 crore.

Besides, India’s largest lender aims to report double-digit credit growth by the second quarter of the next fiscal. "We already have sanctioned term loans of about Rs 25,000 crore into the public sector,"Khara added.

SBI shares traded at Rs 399.55 on the BSE, rising up 44.45 points or by close to 12.52 percent.

first published:February 05, 2021, 14:21 IST