State Bank of India (SBI) shares soared to an all-time high on Monday, breaking the Rs 800 barrier for the first time ever. The surge occurred amidst a broader rally in banking stocks, fueled by robust quarterly earnings. SBI’s stock jumped 4.23 percent to reach an unprecedented high of Rs 805.95.
Rajesh Palviya, Head of Technical Research at Axis Securities, highlighted SBI’s strong position among PSU banks. He projected further gains for the stock, targeting Rs 820-830 levels within the next 2-3 days. Palviya recommended maintaining a stop loss at Rs 750.
The rally coincided with Axis Bank overtaking Kotak Mahindra Bank to become the fourth-largest lender in terms of market capitalization following its March quarter results. Other banking stocks also witnessed gains, except for Kotak Mahindra Bank, which faced a setback after the RBI imposed a ban on its online and mobile banking customer onboarding and fresh credit card acquisitions.
Analysts at Axis Securities estimated SBI’s advances and deposits to have grown by 14 percent and 11 percent, respectively, for the March quarter. The brokerage anticipated a marginal increase in operating expenses due to wage revisions, but projected a sequential improvement in pre-provision operating profit.
Earlier this month, Fitch Ratings affirmed SBI’s business profile score as the highest among Indian banks. The rating agency acknowledged SBI’s consistent business generation and superior risk management compared to its peer state banks. Fitch Ratings also emphasized SBI’s competitive advantages, including its dominant market share, extensive reach, and strong brand loyalty. However, the agency acknowledged that government influence could potentially impact SBI’s traditional business model and risk appetite.
SBI’s strong portfolio selection, driven by its scale, brand loyalty, and widespread presence, gives it an edge over competitors. Despite a slowdown in total loan growth to 14.5 percent year-over-year in 9MFY24 from 16 percent in FY23, SBI’s appetite for risk remains higher than typical for its market position.
Meanwhile, the National Stock Exchange (NSE) announced a revision in the lot size for derivative contracts for 54 stocks, including SBI, effective from April 26.
