SBI Stock Prediction: Only 5% Return in 2023; What to Expected in 2024?
SBI Stock Prediction
The State Bank of India (SBI), as the largest public sector bank in India, occupies a central position in the country’s financial landscape.
However, despite its prominence, the performance of SBI shares in the stock market has been relatively modest over the past year.
As of now, SBI shares have seen a gain of only 5%, marking a departure from the robust returns that one might expect from such a significant financial institution.
Nevertheless, there are recent signs of a potential upswing, with the stock witnessing a 13% increase in the last month.
This mixed performance has not deterred the confidence of several brokerage firms, which remain optimistic about the future trajectory of SBI shares.
Notably, Axis Securities, SMC Global, and Motilal Oswal Securities have all included SBI stock in their top picks for the upcoming year, 2024.
Axis Securities, in its comprehensive research note titled ‘New Year Picks 2024,’ has singled out SBI among PSU banks as the best player in the ongoing recovery of the Indian economy.
The bank’s positive attributes, including a healthy Provision Coverage Ratio (PCR), robust capitalization, strong liability franchise, and an optimistic asset quality outlook, have contributed to its favorable standing.
Axis Securities predicts that SBI is poised to deliver a 1% return on assets and a 16% return on equity in the fiscal years 2024-2026, supported by stable credit costs and cost ratios.
The brokerage firm recommends a ‘Buy’ rating for SBI shares, setting a target price of ₹800 per share, representing a substantial 25% potential increase from its current market value.
SMC Global, in its assessment of SBI, recognizes the bank’s commendable performance across various parameters. Interestingly, SBI has not only met industry standards in certain aspects but has surpassed them in others.
The bank has exhibited significant improvement in its asset quality, a crucial factor contributing to its positive evaluation.
Furthermore, SBI has ambitious plans to double its home loan portfolio over the next five years. To achieve this goal, the bank is actively strengthening its underwriting capacity to enhance service delivery. SMC Global expects the SBI stock price to reach Rs 791 per share within the next 8-10 months.
Motilal Oswal Securities, aligning with its peers, has also identified SBI stock as a promising investment for the year 2024.
The brokerage firm has set a target price of Rs 700 per share, expressing confidence in the future performance of SBI.
Despite a minor setback with SBI shares closing 1.49% lower at ₹641.70 on the NSE on December 29, and at ₹641.95 on the BSE, the market capitalization of SBI, according to BSE, remains substantial at Rs 5.72 lakh crore.
In summary, while the past year has seen a relatively modest performance in terms of stock returns for SBI, the overarching sentiment from reputable brokerage firms suggests a positive outlook for the bank’s shares in the coming year.
The confidence in SBI’s future is grounded in its fundamental strengths and its strategic initiatives to navigate the evolving financial landscape of India.
Axis Securities’ Positive Outlook
Axis Securities, in its detailed research note titled ‘New Year Picks 2024,’ has articulated a bullish stance on SBI’s future prospects.
Within the landscape of PSU banks, Axis Securities identifies SBI as the standout performer in the ongoing economic recovery of India. This optimistic outlook is attributed to several key factors that distinguish SBI in the financial sector.
Firstly, Axis Securities points to SBI’s healthy Provision Coverage Ratio (PCR). The PCR is a crucial metric that reflects a bank’s ability to absorb potential losses from its bad loans.
A high PCR is indicative of prudent risk management practices, and in the case of SBI, it adds a layer of resilience to its financial position. This, coupled with robust capitalization, forms the foundation of SBI’s strength in Axis Securities’ assessment.
The strong liability franchise of SBI is also highlighted as a positive factor. A solid liability franchise implies a stable and diverse source of funds for the bank, reducing dependency on external borrowings.
In the context of economic recovery, having a strong liability franchise positions SBI to effectively meet the financing needs of businesses and individuals.
Additionally, Axis Securities emphasizes the better asset quality outlook for SBI. Asset quality is a critical indicator of a bank’s health, reflecting the quality of its loan portfolio.
The positive outlook in this regard suggests that SBI is well-positioned to manage and recover from any adverse developments in its loan assets.
Looking forward, Axis Securities projects that SBI is poised to deliver a 1% return on assets and a 16% return on equity in the fiscal years 2024-2026.
These projections are underpinned by expectations of stable credit costs and cost ratios, further strengthening the case for a positive outlook on SBI shares.
Consequently, Axis Securities has recommended a ‘Buy’ rating for SBI shares, expressing confidence in the bank’s ability to capitalize on the continued recovery of the Indian economy.
The target price set by Axis Securities is ₹800 per share, representing a substantial 25% potential increase from the current market value. This endorsement positions SBI as a top pick for investors seeking opportunities in 2024.
SMC Global’s Evaluation
SMC Global, in its evaluation of SBI, acknowledges the bank’s commendable performance across various parameters.
What sets SBI apart, according to SMC Global, is its ability to not only meet but surpass industry standards in certain aspects. The comprehensive assessment covers various facets of SBI’s operations and strategic initiatives.
One notable area of improvement is SBI’s asset quality. The bank has demonstrated significant strides in enhancing the quality of its loan portfolio.
This improvement is critical, as it signifies a proactive approach to managing credit risk and potential defaults. A strong asset quality is a key indicator of a bank’s stability and resilience in dynamic economic conditions.
Moreover, SBI’s plans to double its home loan portfolio in the next five years reflect a strategic vision for growth. To achieve this ambitious goal, SBI is actively strengthening its underwriting capacity.
This involves enhancing the bank’s ability to assess the creditworthiness of borrowers, ultimately improving the delivery of financial services.
SMC Global’s optimism about SBI’s future performance is evident in its projection of the SBI stock price reaching Rs 791 per share within the next 8-10 months.
This forecast takes into account the positive trajectory of SBI’s asset quality, strategic initiatives, and the broader economic landscape.
The confidence in this target price suggests that SMC Global sees significant potential for appreciation in SBI shares over the specified time frame.
Motilal Oswal’s Perspective
Motilal Oswal Securities, in line with Axis Securities and SMC Global, has also identified SBI as a noteworthy stock pick for the year 2024.
The inclusion of SBI in Motilal Oswal’s list of top picks underscores a shared belief among brokerage firms in the bank’s potential for growth and value appreciation.
Motilal Oswal Securities has set a target price of Rs 700 per share for SBI. While this target is slightly more conservative than Axis Securities’ projection, it still reflects confidence in the future performance of SBI.
The target price serves as a benchmark for investors, indicating the expected valuation of SBI shares in the specified time frame.
It is worth noting that despite a minor setback on December 29, where SBI shares closed 1.49% lower at ₹641.70 on the NSE and at ₹641.95 on the BSE, the market capitalization of SBI remains substantial. According to BSE, the market cap of SBI stands at Rs 5.72 lakh crore, highlighting the bank’s significant presence in the Indian financial market.
In summary, Motilal Oswal Securities’ inclusion of SBI in its stock picks for 2024 adds to the chorus of positive sentiments from other brokerage firms.
While each firm may have nuanced perspectives and target prices, the overarching theme is one of optimism regarding SBI’s future performance.
Market Overview and Closing Thoughts
The broader market dynamics also play a role in shaping the outlook for SBI shares. Economic conditions, regulatory changes, and global trends can influence the performance of financial institutions, including banks like SBI.
As India continues its journey towards economic recovery, the banking sector is poised to play a pivotal role in supporting growth and development.
Despite the challenges and uncertainties inherent in financial markets, the collective confidence of Axis Securities, SMC Global, and Motilal Oswal Securities in SBI suggests a compelling narrative for investors.
The convergence of positive evaluations from these reputable brokerage firms underscores the potential for SBI shares to deliver value in the coming year.
Investors, however, should exercise prudence and conduct their due diligence before making investment decisions.
While the assessments from brokerage firms provide valuable insights, individual risk tolerance, investment goals, and market conditions should be considered.
Additionally, staying informed about the evolving landscape of the banking sector, regulatory changes, and macroeconomic trends can contribute to a well-informed investment strategy.
In conclusion, the State Bank of India, despite experiencing a relatively modest performance in terms of stock returns over the past year, appears to be well-positioned for potential growth in 2024.
The positive evaluations and recommendations from reputable brokerage firms, grounded in fundamental strengths and strategic initiatives, make SBI an intriguing choice for investors seeking opportunities in the dynamic landscape of the Indian financial market.
