SBI stock trading above Rs 800 mark since April end; time to buy, sell or hold?

Shares of State Bank of India (SBI) are trading above Rs 800 mark since April end. The large cap banking stock crossed the Rs 900 mark to hit a record high of Rs 912 on June 3, 2024 for a single session when exit poll results led to a bull run in the market.

However, the euphoria was shortlived  when results started pouring in on June 4. The banking stock fell back to Rs 770 levels for two sessions. Since then, it has recovered partially to trade above the Rs 800 mark.

In the last session, the SBI stock ended 0.44% lower at Rs 840.20.

Market cap of the bank fell to Rs 7.49 lakh crore. Total 17.06 lakh shares changed hands amounting to a turnover of Rs 143.52 crore on BSE.

The scrip is trading neither in the overbought nor in the oversold zone, signals its relative strength index (RSI) which is at 54.1. SBI stock has a one-year beta of 1.3, indicating very high volatility during the period.

SBI shares are trading higher than the 5 day, 10 day, 20 day, 50 day, 100 day and 200 day moving averages.          

The stock has risen 31% in 2024 and gained 45.75% in a year.

Incred Equities has a target price of Rs 1,100 in a bull case scenario for SBI. It has an add rating for the lender.

The brokerage listed out key business triggers to watch out for in the coming months.

• Strong asset quality in personal loans and other retail loans, despite the headwinds in small-ticket unsecured personal loans,

• To improve the confidence on asset quality.

• Lower CD ratio to support margins in an aggressive competition environment for deposit acquisition.

Bull-case argument not factored in by street

• The standalone SBI, with +1% RoA and an improving asset quality trend, is available at 0.8x FY25F BV which, we believe, is attractive.

Valuation and outlook

• We have an ADD rating on the stock with a target price of Rs.1,000, corresponding to 1.9x FY26F P/BV .

• Bull-case valuation: Assuming a 10% beat to our estimates and a higher multiple of 2x, the target price can be Rs1,100.

Motilal Oswal Financial Services Ltd (MOFSL) has a buy call on the banking stock with a price target of Rs 1015 

"SBI is one of our preferred ideas in the sector. We estimate a 15 per cent CAGR in net profit over FY24-26E, with FY26E RoA/RoE of 1.1 per cent/18.5 per cent. Reiterate BUY with a revised target price of Rs 1,015 (1.5 times FY26E ABV + Rs 235 from subsidiaries," it said.