Why SBI share rose 42% in seven sessions

State Bank of India (SBI) share gained over 42% in the last seven consecutive sessions after FM Sitharaman announced Budget 2021 and the company declared its December quarter earnings.

Today, SBI shares traded 1.66% higher at the day's high of Rs 403.45 against the last close of Rs 396.85. SBI stock opened at Rs 397.40, and also hit the day's low of Rs 389.10.

SBI stock is trading 1.9% away from 52 week high of Rs 408.35, hit on February 5, 2021. Shares of SBI have risen 24% in one year. State Bank of India stock is trading higher than 5, 20, 50, 100 and 200-day moving averages.

The stock hit a 52-week low of Rs 149.55. The stock has risen 40% in one month and 45% year-to-date. In the last seven sessions, SBI stock has grown 42.08%. The market capitalisation of SBI stood at Rs 3,56,092 crore.

The country's largest lender on February 4 reported a decline of 6.9% YoY in its standalone profit at Rs 5,196.22 crore for the quarter ended December 2020. Sequentially, net profit rose 13.60% from Rs 4,574 cr in preceding July-September quarter.

Net interest income, rose by 3.7% YoY to Rs 28,819.94 crore in Q3FY21. On a QoQ basis, it rose 2.3% from Rs 28,181 crore in the September quarter.  

Lender's gross advances rose 6.7% YoY to Rs 24.56 lakh crore, led by a pre-COVID level growth of 15.5% in retail loans. SBI's gross non-performing assets (NPA) ratio was at 4.77% in the December quarter, while net NPA ratio stood at 1.23%.

JM Financial has a Buy rating on SBI stock with a target price of Rs 350.  

Brokerage CLSA also said it sees up to 58% rally in the stock post Q3 results and added," Now with a dual benign credit cycle from fy22cl, we now expect SBI to rerate materially beyond 1x book. We increase our TP from Rs 385 to Rs 560 which implies 1.2x mar-23 book and Rs 166/share of subsidiary value, with a 'buy' rating to the stock."

ICICI Direct in its note said," We revise our rating from HOLD to BUY with a revised target price of Rs 410 (earlier Rs 290), valuing the stock at ~1x FY23E ABV for standalone bank and subsidiaries valued at Rs 132 post holding company discount."

MOFL said in its outlook," Asset quality outlook remains encouraging, with controlled slippages, low restructuring levels, and CE at 96.5% (in line with large peers). The bank is well on track to keep credit cost under control, while recoveries from the resolution of large accounts can further support earnings. We maintain our FY22E/FY23E estimates and project RoA/RoE of 0.8%/14.5% by FY23E. Maintain Buy with a target price of Rs 475/share, implying an upside of Rs 34% from the previous close."

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