SBI share price in focus ahead Q2 results today; Should you buy the PSU bank stock?

State Bank of India (SBI) share price traded marginally higher on Friday ahead of its Q2 results today. The largest state-run lender SBI is set to announce its earnings for the second quarter of FY25 today, November 8.

SBI is expected to report moderate growth in its September quarter earnings amid higher provisions. While the PSU bank’s asset quality is estimated to improve further, it may see a slight margin compression.

According to estimates by Axis Securities, SBI is likely to report net profit growth of around 12% at ₹16,074 crore for the quarter ended September 2024 from ₹14,330 crore in the year-ago quarter. However, on a sequential basis, net profit may fall 5.6%.

SBI’s Net Interest Income (NII) in Q2FY25 is estimated to rise nearly 5% year-on-year (YoY) to ₹41,427 crore. Net Interest Margin (NIM) is likely to witness marginal compression.

Opex ratios are likely to inch up marginally, quarter-on-quarter (QoQ), and Pre-Provisions Operating Profit (PPOP) growth is expected to be flat sequentially.

Kotak Institutional Equities expects SBI’s operating profit to grow 10% YoY in Q2FY25 due to lower operating expenses growth, NIMs to normalise and treasury income to be lower.

“We are building 9% YoY NII growth on the back of 14% YoY loan growth. We are building NIM to decline ~10 bps QoQ, mostly led by slippages (PSL loans) and higher cost of funds. Lower staff costs (base year had several one-offs) have aided operating income growth,” Kotak Equities said.

It expects slippages at ~1.5% of loans, lower than Q1FY25, as there is no seasonal stress from PSL.

Asset Quality

SBI’s asset quality is expected to remain stable on a sequential basis. The bank’s Gross Non-Performing Assets (NPA) ratio in the July-September quarter is estimated to be 2.16% as against 2.21% in the previous quarter.

Net NPA ratio is estimated to be 0.55% in Q2FY25 as against 0.57% in Q1FY25.

SBI Share Price

SBI share price has seen a decent upward trend this year. The PSU banking stock is up over 4% in one week and more than 9.5% in one month. SBI stock price has rallied over 33% year-to-date (YTD), outperforming the 10% rise on Sensex during the same period.

In the past one year, SBI share price has given more than 47% returns as against Sensex’s 22% gain. 

Brokerage firm Motilal Oswal has a ‘Buy’ rating on SBI shares with a target price of ₹1,015 apiece, implying an upside potential of 18% from Thursday’s closing price.

Ganesh Dongre, Senior Manager — Technical Research at Anand Rathi suggests buying SBI shares on dips ahead of Q2 results today.

“SBI shares are witnessing profit booking ahead of Q results today. The stock remains a ‘buy on dip’ for a target of ₹885 apiece. Stop loss should be kept at ₹815 level,” Dongre said.

At 10:20 am, SBI shares were trading 0.12% lower at ₹858.25 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.