SBI shares decline over 3% as deposit growth during Q1 weighs; CLSA suggests 27% potential gains

SBI shares in early trade today at day's low hit levels of Rs 819.4, declining over 3 per cent even though the banking major posted in-line Q1 results. For the reporting quarter, the company on Saturday reported a net profit of Rs 17,035.2 crore for the April-June period, marking a 0.9 per cent increase over the corresponding quarter a year ago that was much better than analysts' estimates of a contraction.

At the last count, shares were down over 2 per cent at Rs 827.65 apiece on the BSE.

The lender's net interest income (NII) during the reporting quarter was at 5.7 per cent at Rs 41,126 crore. Zee Business research desk estimated NII to come in at Rs 42,300 crore. Provisions at the PSU lender soared sharply by 70.4 per cent during the reporting quarter to Rs 4,518 crore. 

Net interest margin (NIM) at the lender declined and was recorded at 3.22 per cent versus 3.3 per cent. The desk estimated NIM to come in at 3.2 per cent.

The lender also saw fresh slippages and was up 104.4 per cent sequentially to Rs 7,903 crore. 

The concern at the lender weighing it down has been weak deposit growth to the tune of 8.18 per cent. Zee Business research estimated deposit growth at 14-16 per cent.

Here's what global brokerages think of SBI after its Q1FY25 earnings.

CLSA maintained outperform rating on the stock and raised the target to Rs 1,075 per share. This implies an upside of 27 per cent from the previous close. The brokerage highlighted that loan growth remained healthy but deposit growth is lagging. NIM has been largely stable & asset quality is also intact. The lender's management expects loan growth Of 15 per cent with margin largely at current levels for FY25. The brokerage forecast 15-16 per cent ROE over the medium term.