SBI touches Rs 5-trillion-mark in market capitalisation for first time: Stock jumps 3% - check brokerage's target

SBI hits Rs 5-trillion market cap: India’s largest lender State Bank of India (SBI) on Wednesday touched the Rs 5-trillion-mark in market capitalisation for the first time, as the shares of the bank hit a record high of Rs 574.65 and 574.7 per share, up around 3 per cent on the BSE and NSE, respectively. 

The public sector bank SBI stood at the seventh position in the overall market cap ranking with a market cap of Rs 5.11 trillion, while it has become the third bank in the country to cross the market cap of Rs 5 trillion after HDFC Bank and ICICI Bank, according to the data from BSE.  

India’s largest private lender HDFC Bank holds first position with a market cap of Rs 8.38 trillion, followed by ICICI Bank with a market cap of Rs 6.33 trillion in banking segment as per BSE data. 

The stock of SBI has outperformed the market and jumped over 28 per cent in the last three months, as against nearly 15 per cent rise in the S&P BSE Sensex. It has gained over 32 per cent in the last one year and jumped nearly 7 per cent in the last five sessions on the BSE. 

The counter at around 01:30 was trading over 2.5 per cent higher to Rs 572.95 per share on the BSE as against 0.12 per cent fall in the S&P BSE Sensex during the same time. 

As per a domestic brokerage firm JM Financial, “SBI’s core fundamentals continue to be on a strong footing and improvement in systemic growth should drive incremental re-rating for the stock.”  

During the April-June quarter of the current fiscal, the PSU bank witnessed a blip in margins, which, in brokerages view should normalise going ahead with the bank’s liability franchise being amongst the best in the sector.  

While the bank may need to raise equity capital over the next 12-24months (CET1), stake sale in subsidiaries (SBI Funds, SBI General Insurance) remains another option to augment capital and may delay the eventual dilution, JM Financial further stated 

The brokerage maintained a BUY rating with target price to Rs 660 per share. It believes SBI should deliver healthy core-PPOP growth in FY23E/FY24E led by gradual improvement in NIMs; lower credit costs and strong loan growth of 16 per cent over FY22-24E.