InvestorQ : What do you suggest on SBI? Is the stock a good buy after the latest quarter results?
indhumathi Sayani made post

What do you suggest on SBI? Is the stock a good buy after the latest quarter results?

Answer
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shrinidhi Rajan answered.
12 months ago


On Friday, the shares of SBI were up by 7.2% after it reported a very smart jump in profit in the second quarter. Not surprisingly, the stock was up nearly 10% higher at one point but you need to first look at what exactly drove this sharp rally in the stock. If you look at the consolidated net profits of SBI, it was up by almost 6-fold at Rs.3375 crore in the September quarter. The bank's net profit for the September quarter stood at Rs.576 crore. While NPAs came down and interest income improved, the real thrust to profit came from the Rs.3800 crore profit realized by SBI from their partial stake sale in SBI Life to the tune of 4%.

There was visible growth in business too. Total income of the SBI group was up at Rs.89,347.91 crore for the quarter compared to Rs.79,303 crore in the corresponding quarter last year. There is also good news on the asset quality front. The asset quality of the bank improved, with the gross non-performing assets (NPA) falling from 9.95% to 7.19% in the last one year which is a really significant fall.

SBI has long been an underpriced stock among the PSU banks and this sharp growth in profit gives the right opportunity to re-rate the stock upward. It is hard to talk about the short term but if you are having a long term perspective of next 2 years then SBI could be one of the best performers in the Indian banking sector. It is more a game of patience.