SBI Q1 Results Review - Steady Quarter; Higher Retail Delinquencies A Monitorable: Dolat Capital

Dolat Capital Report

State Bank of India reported in-line profit after tax with lower opex and write-back in standard provisions offsetting slightly muted net interest income and other income. While headline asset quality metrics were stable QoQ, retail non-performing asset ratio increased across x-press credit and other PL books, partly driven by seasonality.

NPA provisions stood at 50 bps in Q1 FY25, versus 30 basis points for FY24 and Q1 FY24. Overall credit costs at 40 bps however benefitted from write-back in std provisions (restructured provision coverage ratio lowered by 5% QoQ).

Management remains upbeat on loan demand, with growth guidance of 14-15% for FY25E. Credit cost guidance maintained at 50 bps, with scope of some more improvement in cost-income ratio.

Tweaking estimates, we maintain ‘Accumulate’ rating with SOTP based target price of Rs 890 (from Rs 865 earlier), valuing standalone bank at 1.4 times FY26E adjusted book value against return on asset/return on equity of 1%/16%. Price upside is mainly led by improved subsidiary valuations.

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