State Bank of India's (SBI's) strong earnings in the March quarter (Q4) of 2023-24 (FY24) have boosted confidence among analysts, who believe the stock could rally up to €1,000 over the next 12 months about 22 per cent higher from its current level.
The rally, however, may not be steep given the stock's rich valuations, they said.
"We value SBI stock at 1.5x (adjusted) book, and 10x FY26 earnings per share for return on equity (RoEs) of around 15 per cent. Valuations are now getting closer to frontline private banks (IndusInd Bank trading at 1.4x FY26 book), which implies that the riskreward has diminished even if the business is in a relatively strong position," said analysts at Kotak Institutional Equities led by M B Mahesh. The brokerage has raised its target price on the SBI stock to ₹950 from 850.
On the bourses, SBI stock price hit a record high of ₹839.6 apiece on the BSE, after the result announcement on May 9. It, however, ended 0.16 per cent lower at 818.35 per share on the BSE on Friday, as against the benchmark S&P BSE Sensex's 0.36 per cent gain.
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