SBI poised for big rally with rerating, Market Guru Anil Singhvi says buy on dips, hold for long

While the State Bank of India (SBI) shares have been seeing a great rally over many trading sessions now, what can the investors expect from this stock going forward is what investors want to know? Research Analyst Devanshi Ashar brings this exclusive analysis on SBI share price and tells Zee Business Managing Editor Anil Singhvi why it is ready for a bumper jump.  

After every major economic setback or recession, SBI stock sees a major recovery Asher said. There is data to support the trend, she said. 

WATCH | Click on Zee Business Live TV Streaming Below:

The economy saw two major recessions – one was in 2000 and the other in 2008. A lot of issues cropped-up around the asset quality. Many banks suffered around this time and SBI being the largest public sector bank also saw a setback, she said. 

But the recovery after the two recessions were significant, she said. After the recession in 2000, the bank deposits of SBI grew by almost 50 per cent over the next three years. The advances were up by 40-42 per cent. The interest income also rose at a fast pace over the three-month period. Same was the case with the recession in 2008.  

Watch Zee Business Tweet Video Below:

ZEE BUSINESS EXCLUSIVE RESEARCH

SBI में करनी है खरीदारी... शेयर में तूफानी तेजी की तैयारी!

क्यों हो सकती है SBI की री-रेटिंग?

हर मंदी के बाद मजबूती का ट्रेंड कैसे?

देखिए ज़ी बिज़नेस की ये एक्सक्लूसिव रिसर्च#SBI @AnilSinghvi_ @devanshiashar pic.twitter.com/NjIHsIfZcj

— Zee Business (@ZeeBusiness) February 18, 2021

In the period between 2008 and 2011, the deposits of SBI grew by 62 per cent. Meanwhile the loan growth also went up by 67 per cent. The interest income also doubled for SBI, she said adding that the net interest income went up by almost 93 per cent. 

She said that the expectations of trend repeating this time too are there. The asset quality has been improving with NPA situation improving for the bank. She said that there could likely be a rerating of SBI.  

Anil Singhvi’s views on SBI stock 

The Market Guru said that the four-digit target given by him in previous show would be subject to revision after two quarters. He said that the earnings revision in 2003-04 lasted till 2007-08, where the bank earned significantly. He said that this quarter earnings have been best over the last 8 years. There will be a further revision if the economy further picks up from here.  

He said that the Morgan Stanley report putting the current target price at Rs 765 is based on the current book value of Rs 450. 

He said that the book value and PE multiple will change after the rerating and even if the conservative value of PE multiple of 2 is taken, then also the value of stock would be Rs 900. If PE multiple is considered at 3, then the value becomes RS 1350.