Multibagger stock in making? Four factors why SBI shares can touch Rs 750 in a year

Shares of State Bank of India (SBI) are expected to touch the Rs 750 mark in a year, according to estimates by brokerage KRChoksey. The stock of the country’s largest bank has already gained 229% in three years and risen 29% in a year. However, the SBI stock is down 7.14% in 2023. In the current session, SBI shares were trading marginally higher at Rs 570.30 on the BSE. Market cap of the bank stood at Rs 5.08 lakh crore on BSE. Total 1.14 lakh shares changed hands amounting to a turnover of Rs 6.49 crore on BSE. The SBI stock hit a 52 week high of Rs 629.65 on December 15, 2022 and a 52 week low of Rs 430.80 on June 20, 2022. Till date, the stock has gained 32.5% from its 52-week low.

In terms of technicals, the relative strength index (RSI) of SBI stands at 39.8, signaling it's trading neither in the overbought nor in the oversold zone. SBI stock has a one-year beta of 1.2, indicating very high volatility during the period. SBI shares are trading higher than the 50 day, 100 day and 200 day moving averages but lower than 5 day and 20 day moving averages.

Here’s a look at four factors which KR Choksey mentioned while assigning a buy call with a target price of Rs 750 on SBI.

1.) The lender has a diversified range of products and services through its various branches and outlets, joint ventures, subsidiaries and associate companies. The bank serves as a benchmark for the Indian economy because it is the market leader in the Indian banking industry, said the brokerage.

2. The bank is well-capitalized to handle any additional risk on its portfolio due to uncertainty. SBI’s asset quality has steadily improved over the years. The fall in slippages has been sharp for the bank, owing to strong recoveries and upgrades. We expect the slippages to remain moderate in the upcoming quarters.

3. The bank's largest segment is retail and digital banking in terms of the loan portfolio. The bank expects there tail lending segment to be strong, aided by robust growth in the Xpress credit segment.

4. SBI has positioned itself as one of the best-in-class players in the liability franchise market. With strong brand equity and abroad presence in India through its branches,the bank has a robust customer base for its deposits. SBI will continue to aim at increasing the CASA ratio with an improved focus on the current account growth and, simultaneously, maintain its leadership position in the savings and overall deposits.

Last week, State Bank of India said it will raise up to Rs 50,000 crore by issuance of debt instruments to Indian and overseas investors in the current financial year. SBI said that the central board has accorded approval for raising funds in INR and / or any other convertible currency by issue of debt instruments including but not limited to Long Term Bonds, Basel III compliant Additional Tier 1 Bonds, Basel III compliant Tier 2 Bonds, up to an amount of Rs 50,000 crore (Rupees Fifty Thousand Crores only) through private placement mode to Indian and/or Overseas investors during FY24.

SBI reported a sharp year-on-year (YoY) rise in its fourth-quarter profit during the financial year 2022-23 (FY23). Q4 profit surged 83.18 per cent to Rs 16,694.51 crore against Rs 9,113.53 crore in the same period a year ago. Sequentially, the lender recorded a 17.52 rise in its March 2023 quarter profit. The bank earned Rs 92,951.06 crore as interest income in Q4 FY23 against Rs 70,733.25 crore in the year-ago period.

The lender also announced a dividend of Rs 11.30 per equity share. The bank's Board has declared a dividend of Rs 11.30 per equity share (1,130%) for the financial year ended March 31, 2023.

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