SBI beats LIC to become most-valued PSU firm – Motilal Oswal sees over 20% gain in stock price

Surging for the third straight session on Wednesday, State Bank of India (SBI) has become the most valuable listed public sector undertaking (PSU) company as it surpassed insurance behemoth --Life Insurance Corporation of India's (LIC) market capitalisation (market-cap). 

SBI shares jumped almost 7 per cent in the last three sessions on the BSE, taking the market cap to Rs 4,53,727.26 crore at around 02:10 PM on Wednesday against Rs 4,35,570.97 crore market cap of LIC at the same time. The shares of LIC were trading flat with a negative bias on the BSE. 

The state-owned PSU bank has become the seventh largest company in the overall market-cap ranking of listed companies on the BSE. LIC slipped to number eight in the list with a market cap of Rs 4.38 trillion, the BSE data showed. 

The stock of SBI has rallied over 17 per cent in the past one month as compared to over 4 per cent gain in LIC's stock. In comparison, the S&P BSE Sensex was up 7.6 per cent during the same period. SBI has gained almost 5 per cent in the last one week against a 4 per cent decline in LIC's share price. 

LIC has lost around Rs 1.15 lakh crore market-cap since its listing on May 17, 2022, however, during the same period SBI’s market-cap increased by Rs 36,367 crore, according to the BSE data. 

SBI has delivered a strong performance, amid a challenging macro-environment, led by steady business and revenue growth and controlled provisions, Motilal Oswal said in his note, adding that the management expects the momentum to remain healthy as utilization levels improve, while Retail growth is likely to remain steady.  

A higher mix of floating loans and CASA mix will support margin in a rising interest rate environment similarly, asset quality performance has been strong, and the outlook remains healthy, with a low restructured book and SMA pool, the domestic brokerage said. 

Motilal Oswal estimates credit cost to be controlled at 1% in FY24, enabling 28% earnings CAGR over FY22-24 and expects SBIN to deliver an RoA/RoE of 0.9%/16.7% in FY24. SBIN remains the brokerage’s top Buy in the sector, with a target of Rs 600 per share, implying around a 21 per cent upside.