State Bank of India share price forecast

Net Interest Income (NII) for Q2FY23 increased by 12.8% YoY (+12.8% QoQ) at INR 3,51,834 Mn. NIMs stood at 3.39% in Q2FY23 vs 3.33% in Q2FY22 (vs 3.23% in Q1FY23).

Hindustan Petroleum Corporation: Our ADD rating on Hindustan Petroleum Corporation (HPCL) with a price target of INR 253 is premised on (1) recovery in domestic demand for petroleum products and (2) robust refining margins over the coming 18 months. Q2FY23 EBITDA loss stood at INR 15bn, below our estimated loss, owing to lower crude throughput, weak marketing segment performance, and higher inventory loss. Reported GRM stood at USD 8.4/bbl (HSIE: USD 9.2/bbl). Relaxo Footwears: Relaxo disappointed on its Q2FY23 print. The double whammy of inflation-led pressure on consumer demand and production costs continued. Revenue declined 6% YoY to INR6.7bn in Q2 (a three-year CAGR: 3%; HSIE: INR7.36bn). Volume/net realisation growth stood at -15/11% YoY respectivelya function of (1) increasing skew of closed footwear in the mix; (2) soft demand (esp. in Hawaii/PU/EVA segment). Profitability remains sub-optimal, thanks to high RM inflation in key inputs. Price correction of 15-20% will be taken to spur demand, going forward. We've cut our estimates by ~8/5% each for FY24/25 to account for lower profitability. Our DCF-based TP stands revised at INR700/sh (earlier INR750/sh); implying 46x Sep-24E P/E. Maintain SELL. DCB Bank: DCB Bank's earnings were in line with our estimates, on the back of strong loan growth (+17% YoY) and lower credit costs (40bps - annualised), partially offset by elevated opex intensity. Gross slippages stayed elevated at 6.3% (Q1FY23: 8.3%), driven by slippages in a handful of legacy corporate accountshealthy organic upgrades/recoveries led to a 30bps sequential improvement in GNPA, at 3.9%. Stress pool continues to remain sticky (NNPA +...

State Bank of India’s (SBI) Q2FY23 earnings surpassed expectations by a wide margin and beat was across operating metrics crossing 1% RoA and 17% RoE mark.

We maintain BUY on the stock with a revised target price of Rs 740/share (SOTP basis core book at 1.4x FY24E and subsidiaries at Rs 190), implying an upside of 24% from CMP.

Net Interest Income (NII) for Q1FY23 increased by 12.9% YoY, while it was flat QoQ at INR 3,11,959 Mn. NIMs stood at 3.23% in Q1FY23 vs 3.15% in Q1FY22 (vs 3.40% in Q4FY22).

Hindustan Petroleum Corporation: Our ADD rating on Hindustan Petroleum Corporation (HPCL) with a price target of INR 280 is premised on (1) recovery in domestic demand for petroleum products; (2) improvement in refining margins over the coming 18 months; and (3) gradual improvement in marketing margins for FY23-24 vis--vis FY22 levels. Q1FY23 EBITDA loss stood at INR 125bn, well above our estimated loss, owing to weaker-than-expected marketing segment performance and higher expenses, resulting in the highest-ever quarterly loss of INR 102bn. Reported GRM stood at USD 16.7/bbl (HSIE: USD 19.9/bbl). Kansai Nerolac: Kansai Nerolac's (KNPL) standalone revenue grew 49% YoY (INR19.4bn, three-year CAGR: 10%; HSIE: INR18.7bn). In decorative segment, volume/realisation is estimated to have clocked ~21/22% resp YoY in Q1. Underperformance vis-a-vis the top-2 players reduced and management highlighted its focus on recouping lost share via (1) increasing salience in premium products and (2) flexing the marketing lever, going forward. Industrial segment is estimated to have outpaced portfolio growth (HSIE: ~52%). Profitability was broadly in line (GM/EBITDAM at 29.9/13.1% vs HSIE: 30/13.7%). While we revise our FY24/25 EPS estimates marginally (2% each), we downgrade the stock to ADD (earlier BUY) as we suspect risk-reward is evenly matched now (post the recent stock run-up) in the wake of new competition. LIC Housing Finance: LICHF reported strong P&L outcomes in Q1FY23, partly driven by low base in terms of opex intensity as well as credit costs. While AUM growth was muted, disbursements were healthy at INR152bn, even as the management guided for higher share of non-core project loans,...

State Bank of India’s (SBI) Q1FY23 earnings were dragged by treasury loss of Rs 65.5bn, contraction in miscellaneous income and lower other interest income.

We maintain BUY on the stock with a target price of Rs 665/share (SOTP basis core book at 1.3x FY24E and subsidiaries at Rs 185), implying an upside of 45% from the CMP.