SBI reported a soft quarter as core PPoP missed PLe by 8.2% due to miss on NIM/fees/opex although loan growth was superior. Asset quality was better and core PAT beat PLe by 9.2% as provisions were materially lesser since (1) lower net slippages led to controlled credit costs and (2) there was a provision write-back as a corporate account was upgraded from restructured. NIM was lower led by QoQ fall in CASA, rise in borrowings and sharp drop in international yields. As MCLR resets higher on a portion of loans in Q4FY25, domestic loan yields could improve, supporting NIM. Credit growth guidance is maintained at 14% for FY25; deposit growth was guided at 10% due to LDR cushion. We lower NIM for FY25/26/27 which would be offset by slight reduction in provisions.
Outlook
The stock is currently trading at 0.9x on Sep’26 core ABV; we lower multiple to 1.3x from 1.5x and trim SOTP-based TP to Rs900 from Rs1025. Retain ‘BUY’.
Top-notch SEBI registered research analyst
Best SEBI registered Intraday tips provider
Telegram | Facebook | Instagram
Call: +91 9624421555 / +91 9624461555