SBI share price drops 3% after net profit declines in Q1; brokerages remain bullish, raise target prices; Here's what they recommended

Shares of State Bank of India declined three per cent in BSE intraday trade on Monday after the India's largest lender reported a decline of 6.7% in net profit Year-on-Year (YoY) to Rs 6.068.08 crore in the quarter ended June 2022. The State Bank had reported a net profit of Rs 6504 crore in the corresponding quarter of the previous fiscal.   On quarter-on-quarter (QoQ) basis, the loss widened even more as the bank had clocked a profit of Rs 9,113.53 crore in the previous quarter ended on March 31, 2022. 

Even though the SBI missed street estimates in Q1FY23, the brokerages were bullish on the public sector bank counter. They feel that though the net Interest margin (NIM) was a miss, but there is a hope of improvement on the same front. They were also impressed with robust retail loan growth of 19% on YoY basis.  

As per domestic brokerage, Motilal Oswal, SBIN has delivered a modest 1QFY23, dragged by higher MTM losses of INR65.5b and a slight decline in margin.  

"However, strong control on OPEX enabled a 14% YoY growth in core PPOP. Loan growth was strong, and the bank expects to sustain the momentum with Retail being the torch bearer. Stability in the rate environment is averting any further MTM losses," it said.  

Motilal Oswal maintained a buy call on SBI with a revised target price of Rs 625 per share, an 18% upside on Friday's closing price of Rs 531.  

"We expect the bank to deliver a FY24E RoA/RoE of 0.9%/17%. SBIN remains our conviction Buy in the sector," it added.  

Here is what global brokerages recommend on State Bank of India (SBI) post Q1 results:  

Citi on SBI (CMP: 531.05)  

Maintain Buy; Target raised to Rs 630 from Rs 590  

Morgan Stanley on SBI (CMP: 531.05)  

Maintain Overweight; Target raised to Rs 620 from Rs 580  

HSBC on SBI (CMP: 531.05)  

Maintain Buy; Target raised to Rs630 from Rs 600  

CLSA on SBI (CMP: 531.05)  

Maintain Buy; Target Raised to Rs 660  

JP Morgan on SBI (CMP: 531.05)  

Maintain Overweight; Target Rs 650  

Macquarie on SBI (CMP: 531.05)  

Maintain Outperform; Target Rs 665  

SBI Q1FY23 results 

Earlier, SBI's  standalone total income declined to Rs 74,998.57 crore in the first quarter of 2022-23, as against Rs 77,347.17 crore in the same period a year ago, SBI said in a regulatory filing.

The bank's gross non-performing assets (NPA) ratio improved to 3.91 per cent from 5.32 per cent at June-end last year.
Similarly, net NPAs declined to 1.02 per cent in June 2022 from 1.7 per cent a year ago.

On a consolidated basis, SBI's net profit fell marginally to Rs 7,325.11 crore compared to Rs 7,379.91 crore in the same quarter a year ago. 

Gross advances of the bank showed a good growth 14.93 per cent driven by retail personal advances, out of which home loans grew by 13.77 per cent. In absolute terms, the bank reported a gross advances of Rs 29 lakh crore, as against Rs 25 lakh crore in the same quarter last year.