The valuations for is at 1.3X FY23 price to book and it is the best gainer on Nifty Bank on YTD basis. Would you go ahead and hike the target price for SBI? Would you ask investors to still remain buyers in the stock even at the current levels?
The numbers are good from SBI side. In fact, last quarter also, it was not bad. Asset quality has not really deteriorated much and if it is in a position to control the asset quality, then certainly the past underwriting might have been much better than the peer banks and that is why incrementally, we will not see a big amount of write up and provisioning coming from SBI. I am not saying this for all PSU banks, but particularly for SBI.
I believe the worst could be over for SBI. From a medium term point of view, there is potential for SBI to reward investors better than other large banks. A lot of other private banks also have seen a sizable amount of stress building up in asset quality and there is a stagnation in terms of balance sheet. I think SBI is positioned much better now and valuations are not demanding. I am not expecting a runaway rally from here onwards but the risk reward is favourable for investors from the current level.
