SBI joins Rs 5-trillion market cap club; stock surges 26% in three months

At 09:42 AM, with a market cap of Rs 5.03 trillion, SBI stood at seventh place in the overall market cap ranking of companies, BSE data shows

Public lender State Bank of India (SBI) hit the Rs 5-trillion-mark in market capitalisation (market cap) for the first time on Wednesday after its shares touched a record high of Rs 564.45, up 1 per cent on the BSE in intra-day trade in an otherwise weak market.

With a market cap of Rs 5.03 trillion, SBI stood at the seventh position in the overall market cap ranking, according to the data from BSE. In comparison, the S&P BSE Sensex was down 0.85 per cent at 60,058 at 09:42 AM.

With this, SBI has become the third lender in the country to cross the market cap of Rs 5 trillion. HDFC Bank, India's largest private lender holds first rank in this list, with a market cap of Rs 8.38 trillion, followed by ICICI Bank, which has a market cap of Rs 6.33 trillion, data shows.

In the past three months, SBI has outperformed the market by surging 26 per cent, as against 13.9 per cent rise in the S&P BSE Sensex. ICICI Bank has rallied 32 per cent, while HDFC Bank has gained 15 per cent during the same period.

SBI is the largest bank in India with a balance sheet size of over around Rs 54 trillion crore (as of March 2022). It has a healthy retail portfolio and best operating metrics among PSU banks. Its strong subsidiaries add value to the bank.

Analysts at ICICI Securities believe overall strength in lending franchise and liability growth of over 9 per cent guidance along with a well provisioned book remains positive. Prudent asset quality coupled with healthy provision coverage provides comfort on earnings trajectory. Unlocking of subsidiaries holds upside potential.

The brokerage firm believes asset quality trend should continue to improve as well and management commentaries have also indicated incremental stress will be lower.

"Momentum in credit growth and operational performance is expected to continue ahead. In FY23E, credit growth is likely to witness expansion. Firing up unsecured book to aid in initial quarters of FY23E; recovery in corporate credit offtake to revive credit growth from H2FY23. Gradual transmission of rate hike to offset rising competitive intensity on deposits. Deposit mobilisation and thus trend in CD ratio to be watched," analysts said in banking sector Q1 earning wrap.

According to Canara Bank Securities, SBI has shown stellar operational performance and increased profitability despite provisioning. There is sharp fall in slippages percentage from 2.47 per cent in June 2021 to 0.99 per cent in March 2022.

"We are very bullish on the stock in view of attractive valuation, strong distribution network to unleash huge Indian potential, adequate capital, improved asset quality, increased digitalization spends, normalizing macro conditions after easing Lockdown restrictions, and robust performance from subsidiaries," the brokerage firm said in its Q1 result update.

Technical View

Bias: Positive

Support: Rs 550

Resistance: Rs 570, Rs 574

SBI has been trading with a positive bias since mid-July after its 20-DMA crossed the 50-DMA on the daily chart. The stock has since gained 16.5 per cent in the last two months.

For the last four straight days, the stock has been treading along its higher-end of the Bollinger Band on the daily chart, which currently is at Rs 563. On the weekly chart, too, the stock is within a striking distance of the higher-end of the Bollinger Band at Rs 570.

Select key momentum oscillators like the 14-RSI and Slow Stochastic, although, in overbought zone, are still in favour of the bulls. The MACD and the Directional Index, too, are favourable.

On the upside, the stock needs to break and sustain above the Rs 570-574 range for the buying momentum to pick-up steam. On the downside, the Rs 550-level is the immediate support, below which the stock can slide to Rs 535 - its 20-DMA.

(With inputs from Rex Cano)