SBI is well positioned to deliver 12-13% loan growth CAGR over FY25-27E, aided by its focus on a high-quality, granular loan portfolio. The bank’s near-term growth may remain even stronger as it focuses on optimizing its CD ratio and gaining market share in advances.

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Motilal Oswal Report

State Bank of India has delivered a robust set of performance in recent years, propelled by steady business and revenue growth as well as controlled provisions. Net interest margin has contracted in recent quarters, and the management has guided for broadly stable margins going forward.

This is because the bank has levers in place (Credit-Deposit ratio, MCLR re-pricing, et al.) to mitigate the impact of the rising cost of deposits. SBI’s asset quality remains healthy with consistent improvements in headline asset quality ratios, while the restructured book remains under control at 0.4% of loans.

We estimate credit costs to remain in check at ~50 bp, enabling a 12% earnings CAGR over FY24-27. We, thus, estimate SBI to deliver RoA/RoE of ~1.1%/17.3% in FY27.

SBI remains our preferred Buy in the sector with a target price of Rs 950 (premised on 1.2x FY27E adjusted book value).

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. Read more on Research Reports by NDTV Profit.The brokerage believes that SBI is better positioned to navigate through systemic pressures in respect to loan growth, margins and robust asset quality.  Read MoreResearch Reports 

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