SBI stock hits one-month high after Morgan Stanley raises target price of the lender

The State Bank of India (SBI) stock hit a fresh one-month high today after Morgan Stanley raised its target price to Rs 375 rupees from Rs 350 assigning it overweight rating saying it saw a big turnaround in profit of the lender from FY'20.

The stock hit an intra day high of 294.05 a fresh one-month high on Morgan Stanley upgrading the stock.

The stock has been gaining for the last three days and has risen 5.19% during the period.     

However, the stock has lost 8.19% during the last one year and fallen 7.08% since the beginning gof this year.

The stock is  trading below its 50-day and 200-day moving average of 280.16 and 278.38.

37 of 43 brokerages rate the stock "buy" or 'outperform', five "hold" and one "sell", according to analysts' recommendations tracked by Reuters.

The investment bank expects the state lender to earn more than Rs 30,000 crore ($4.19 bln) profit in FY20 and Rs 37,000 crore in FY'21.

Provisions will start falling quickly from second half of 2019, it said.

Morgan Stanley expects credit costs to drop to less than 100 bps in FY20.

It also expects improvement in the lender's NIM (net interest margin) over the next two years driven by continued control on funding costs and lower non-interest earning assets

Morgan Stanley expects expenses to grow in single digits as some one-off provisions (for retirement benefits) run off cost income ratio likely to decline to 51% in FY20 from 56% in FY19

More than 13.1 million shares change hands compared with the 30-day moving average around 22 million in trade today.

Edited by Aseem Thapliyal