Profitability and Growth
State Bank of India (SBI) has shown significant growth and profitability in recent years. In FY2024, SBI reported a net profit of ₹61,077 crore, growing 21.59% year-over-year. The bank’s balance sheet size has crossed ₹61 lakh crore, with a strong market share in deposits (22.55%) and advances (19.06%). Gross advances grew by 15.99% to ₹32.69 lakh crore, driven by retail personal and SME advances.
Valuations Based on Book Value
SBI’s book value per share is ₹465, with a price-to-book (P/B) ratio of 1.637. This suggests the bank is trading at a premium compared to its book value, reflecting positive investor sentiment. When compared to its peers, SBI stands strong with these valuations, indicating confidence in its future prospects.
Technical Analysis for Short to Medium Term
SBI's stock has been on an upward trend, appreciating 5.13% in the last month, closing at ₹820 on October 31, 2024. Technical indicators like the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) suggest a bullish outlook in the short to medium term, with potential for further gains. Stock price is holding above the 200 dema support in falling market and with banks giving good results overall, we may see the 845-850 resistance being tested and a close above this could lead to good upside.
Long-Term Potential for Investors
SBI's long-term potential remains robust due to its dominant market position and continuous improvement in operational efficiency. The bank’s focus on digital banking through platforms like YONO and expanding its customer base bodes well for future growth. Additionally, the positive outlook for the Indian economy, projected to grow at 7.0% in FY2025, provides a favorable environment for SBI’s expansion. ICICI Securities has a target of 1000 here and has a "BUY" outlook.
In summary, SBI presents a strong case for investment with its solid profitability, attractive valuations, positive technical indicators, and promising long-term potential. Investors looking for stable and substantial returns may find SBI to be an excellent addition to their portfolio.
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