Source : INDIA TODAY NEWS
Shares of State Bank of India rose sharply on Monday, jumping over 6% to hit a fresh 52-week high of Rs 1,136.85. The stock was trading at Rs 1,130.90, up Rs 64.50 or 6.05% from the previous close of Rs 1,066.40 as oif 10:10 am.
With this move, SBI emerged as the top gainer on Sensex in early trade and recorded its biggest single-day gain since June 2024. The rally came after the bank reported strong third-quarter results, which were better than market expectations.
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SBI shares have been on a steady rise over the past year. The stock has gained 7.54% in the last five trading sessions and 13.04% over the past one month. Over six months, the shares are up 37.35%, while the one-year gain stands at 53.50%.
During Monday’s session, the stock opened at Rs 1,120, touched a high of Rs 1,136.85 and a low of Rs 1,100.60. The volume-weighted average price for the day was Rs 1,126.26. The stock is now trading close to its upper price band of Rs 1,173, while the lower price band stands at Rs 959.80.
WHY SBI SHARES ROSE TODAY
The main reason behind the sharp rise was SBI’s strong performance in the December quarter. The bank reported a 24% growth in net profit, beating market estimates. It also outperformed large private sector banks such as ICICI Bank and HDFC Bank in loan growth during the quarter.
SBI also raised its guidance for the next financial year, which added to investor confidence. Analysts said this showed better visibility on growth and earnings at a time when concerns remain around credit growth in the banking sector.
CLSA said sequential loan growth at SBI was much better than other public sector banks as well as large private banks. This pointed to stronger demand and better execution by the bank.
CITI said margins are expected to remain at or above 3%. It added that disciplined lending practices, along with recoveries, should support healthy asset quality in the coming quarters.
Nuvama noted that SBI’s core earnings have been stronger than private banks for the third straight quarter. It highlighted stable net interest margins, loan growth higher than the sector average and strong fee income as key positives.
Bernstein said the combination of strong growth, improved margins and better asset quality has kept return on assets above the 1% mark and return on equity above 20%.
WHAT BROKERAGES ARE SAYING
After the results, several brokerages raised their target prices on SBI shares.
Nomura has a Buy rating with a target price of Rs 1,235. CLSA has an Outperform rating and a target of Rs 1,275. CITI has retained a Buy rating with a target of Rs 1,265. Bernstein has a Market Perform rating with a target of Rs 1,100. Jefferies has a Buy rating and the highest target price of Rs 1,300. Nuvama has a Buy rating with a target of Rs 1,250, while UBS has a Neutral rating with a target price of Rs 1,120.
Nomura said a large part of the stock’s re-rating has already happened. It added that further gains in SBI shares are likely to be driven more by earnings growth rather than higher valuation multiples.
Analysts remain largely positive on SBI due to its strong earnings, steady margins and improving asset quality. However, some brokerages have flagged that a lot of the recent optimism is already priced into the stock.
For investors, the next leg of the rally may depend on how well SBI delivers on earnings growth and maintains loan momentum in the coming quarters, rather than on further expansion in valuations.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
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SOURCE :- TIMES OF INDIA
