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SBI delivered on growth and asset quality, margins trajectory remains volatile


SBI reported mixed performance in Q3FY25. Steady performance was seen across growth, asset quality, credit cost, though margin erosion remained higher than anticipated.
Credit growth continued to remain broadly in-line with industry trend at 13.5% YoY, backed by MSME, agri and corporate segment. Deposit accretion remained steady at 9.8% YoY, contributed primarily by term deposit growth (13.5% YoY).
Asset quality continued to remain robust with slippages down 9 bps QoQ at 59 bps, GNPA down 6 bps QoQ at 2.07% and NNPA flat at 53 bps. Thus, credit cost remained under control at 37 bps and PCR remained broadly steady at ~74.7%.
Bank margins witnessed erosion of 13 bps QoQ at 3.01%, owing to moderation in growth in Xpress credit and increase in cost of liabilities. Surge in earnings at 84.3% YoY is optical, owing to one-off provision in Q2FY24.
Guidance on future growth remained steady (advances at 14-16%, deposit ~10% & RoA at ~1%).
SBI has demonstrated its strength in the last few quarters both on core operating performance and asset quality. We revise valuation multiple lower at 1.2x, thereby revising our target at ₹910 (earlier ₹1000), valuing subsidiaries at ₹206 per share. Maintain Buy rating on the stock.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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