SBI shares trade within Rs 12 of record high; should you buy, sell or hold now?

State Bank of India (SBI) shares rose on Tuesday, on track to close higher for the fourth session in a row, to trade within inches of an all-time high registered almost a year ago. The stock of SBI, the country's largest lender by assets, gained by as much as Rs 3.5, or 0.6 per cent, to Rs 617.9 apeice on BSE, coming within Rs 12, or 1.9 per cent, of a record Rs 629.7 scaled in mid-December 2022. Many analysts have positive views on the PSU banking behemoth from a long-term perspective.

How SBI shares have fared in recent past 

SBI shares have risen just six per cent in a month, underperforming gains to the tune of 8-10.5 per cent in the Nifty50, Nifty Bank and Nifty PSU Bank indices.  The stock has barely moved in comparison to its price a year ago. 

At the intraday high, SBI shares came within 1.9 per cent of their record high.

Here's what brokerages make of SBI shares now: 

Nomura 

The brokerage maintained its 'buy' call for the counter with a target price of Rs 665, implying an upside of more than eight per cent from its previous close. The brokerage estimates more wage-related opex one-offs for the lender in the second half of the current financial year. 

According to Nomura, SBI is likely to face an extra wage bill to the tune of Rs 900-1,800 crore in the six-month period which could lead its provisions to the Rs 1,600-3,300 crore range. Hence, there could likely be a negative impact of 3-5 per cent to SBI's pre-provision operating profit (PPOP) and 3-7 per cent to its PAT in FY24, according to the brokerage.

Geojit Financial Services 

Last month, the brokerage reiterated a 'buy' call on SBI with a target of Rs 721, implying an upside of more than 17 per cent. 

Many experts expect buying influx to continue in the PSU banking space amid positive market momentum.

For the unversed, bank employee unions and the Indian Bank Association (IBA) have signed a memorandum of understanding (MoU) about the 12th bipartite wage hike settlement. 

Accordingly, bank employees will receive a 17 per cent increase in salary with effect from November 1, 2022.