SBI market-cap crosses Rs 8 trillion-mark for 1st time; stock rallies 8.4%

SBI share price: SBI is, now, behind RIL, TCS, HDFC Bank, and ICICI Bank in m-cap rating

State Bank of India (SBI), on Monday, joined the elite club of stocks having market capitalisation of Rs 8 trillion. The country's largest public sector bank's (PSB's) m-cap crossed the milestone for the first time today after its share price rallied 8.4 per cent, hitting a new high of Rs 899.55 on the BSE in the intraday trade.

SBI's stock was up 8.2 per cent at Rs 898.45 on the BSE at 11:58 AM, translating into a Rs 8.02-trillion market cap. In comparison, the S&P BSE Sensex was up 3.1 per cent at 76,279.

Currently, Reliance Industries (Rs 20.07 trillion), Tata Consultancy Services (Rs 13.41 trillion), HDFC Bank (Rs 11.90 trillion), Bharti Airtel (Rs 8.35 trillion), and ICICI Bank (Rs 8.3 trillion) have market cap of over Rs 8 trillion, BSE data shows.

SBI is trading higher for the third straight days, surging 9.3 per cent during the period. On May 29, S&P Global Ratings revised its rating outlook on six Indian banks, including SBI, from 'stable' to 'positive'. This follows a similar action on India's sovereign rating (BBB-/Positive) as India's robust economic expansion had a constructive impact on the sovereign's credit metrics.

"The positive rating outlook on SBI reflects that on the sovereign. The rating on SBI is capped by our sovereign credit rating on India, and will therefore move in tandem with that on the sovereign," S&P Global Ratings said.

The global rating agency expects the public sector bank to maintain its market leadership in India's banking sector over the next two years. SBI's funding and liquidity should stay strong, supported by high customer confidence.

S&P Global expects SBI's asset quality to remain better than the sector average in India, and comparable with that of similar rated international peers. The bank's capitalisation is likely to stay weaker than that of India's private sector banks.

Meanwhile, SBI has demonstrated its strength in the last few quarters both on core operating performance and asset quality. Management remains confident on growth, maintenance of margins and improvement in RoA. Sustained balance sheet growth (13-15 per cent), strong liabilities franchise and prudent asset quality is expected to aid RoA at ~1 per cent in FY25-26E. Gains on treasury and recovery from existing stressed book to act as catalyst, according to analysts at ICICI Securities.

"We like SBI for its consistent performance on loan growth and comfortable LDR, which supports margins in an aggressively competitive environment. Strong asset quality in personal unsecured loans and corporate loans adds to the comfort. We retain our high- conviction ADD rating on SBI with a higher target price of Rs 1,000 (Rs 800 earlier) or ~1.9x FY26F P/ABV," said analysts at InCred Research Services in its result update.