Public lender SBI hits Rs 5 trillion in market capitalization for the 1st time

SBI is the largest bank in India with a balance sheet size of over around Rs 54 trillion crores (as of March 2022). It has a healthy retail portfolio and best-operating metrics among PSU banks. Its strong subsidiaries add value to the bank

Public lender State Bank of India (SBI) hit the Rs 5-trillion-mark in market capitalization (market cap) for the first time on Wednesday after its shares touched a record high of Rs 564.45, up 1 percent on the BSE in intra-day trade in an otherwise weak market.

With a market cap of Rs 5.03 trillion, SBI stood at the seventh position in the overall market cap ranking, according to the data from BSE. In comparison, the S&P BSE Sensex was down 0.85 percent at 60,058 at 09:42 AM.

With this, SBI has become the third lender in the country to cross the market cap of Rs 5 trillion. HDFC Bank, India’s largest private lender holds the first rank in this list, with a market cap of Rs 8.38 trillion, followed by ICICI Bank, which has a market cap of Rs 6.33 trillion, data shows.

In the past three months, SBI has outperformed the market by surging 26 percent, against a 13.9 percent rise in the S&P BSE Sensex. ICICI Bank has rallied 32 percent, while HDFC Bank has gained 15 percent during the same period.

SBI is the largest bank in India with a balance sheet size of over around Rs 54 trillion crores (as of March 2022). It has a healthy retail portfolio and best operating metrics among PSU banks. Its strong subsidiaries add value to the bank.

Analysts at ICICI Securities believe overall strength in the lending franchise and liability growth of over 9 percent guidance along with a well-provisioned book remains positive. Prudent asset quality coupled with healthy provision coverage provides comfort on earnings trajectory. Unlocking of subsidiaries holds upside potential.

The brokerage firm believes asset quality trend should continue to improve as well and management commentaries have also indicated incremental stress will be lower.

“Momentum in credit growth and operational performance is expected to continue ahead. In FY23E, credit growth is likely to witness expansion. Firing up unsecured book to aid in initial quarters of FY23E; recovery in corporate credit offtake to revive credit growth from H2FY23. Gradual transmission of a rate hike to offset rising competitive intensity on deposits. Deposit mobilization and thus trend in CD ratio to be watched,” analysts said in banking sector Q1 earning wrap.

According to Canara Bank Securities, SBI has shown stellar operational performance and increased profitability despite provisioning. There is sharp fall in slippage percentage from 2.47 percent in June 2021 to 0.99 percent in March 2022.

“We are very bullish on the stock in view of attractive valuation, strong distribution network to unleash huge Indian potential, adequate capital, improved asset quality, increased digitalization spends, normalizing macro conditions after easing Lockdown restrictions, and robust performance from subsidiaries,” the brokerage firm said in its Q1 result update.