Analyst optimism at 17-year high for SBI, 98% give 'buy' rating

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Analysts are betting big on the SBI stock with 98% handing it a 'buy' rating. Its assets are seen as 'impeccable' and it is expected to weather the COVID storm with robust provisioning.

Analyst optimism at 17-year high for SBI, 98% give 'buy' rating
Analysts continue to be bullish about the State Bank of India (SBI) shares and are betting on its improved asset quality hoping it would be enough for India’s largest lender to weather the post-COVID-19 recovery.
Forty seven out of 48 analysts who cover the share had a ‘buy’ rating while only one had a ‘hold’ rating. This leads to a 98 percent ratio, the highest in 17 years, according to data collected by Bloomberg. The 12-month price target consensus is also expected to see 18 percent growth. The S&P BSE Index benchmark is nearly half of the projected growth of SBI.
Financial experts are expecting the leading lenders to weather the impact of a down-trending economy as a result of robust provisioning. New measures will also allow banks to minimise the extent of bad loans until after 2022.
Gautam Duggad, Head of Research at Motilal Oswal Financial Services Limited, said SBI’s “earnings will likely maintain pace as balance sheet cleansing is largely over.”
He added that the bank’s assets “are impeccable, with slippages significantly lower versus peers.”
Bloomberg Intelligence analyst Diksha Gera wrote that return on equity may rise back up by about four percentage points to above 12% in fiscal year 2022 due to better asset quality though she did not include a rating on the stock.
Societe Generale SA strategists, who downgraded Indian stocks to underweight on Friday, mentioned in a note that banks have been “conservative in lending to retail and small enterprises, the two most vulnerable segments” and managed to raise equity worth $11 billion to offset bad loan loss provisioning ratios.
SBI noted a record profit in its latest quarter filings that beat market estimates. The bank also recorded declines in the number of new stressed assets, slippage ratio, and gross number of non-performing assets.

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