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Kolkata: India’s largest bank, State Bank of India (SBI), has got an ‘Outperform’ rating by global brokerage firm CLSA, which partly explains the buying enthusiasm in the counter. CLSA has fixed a target price of Rs 1,050, attributing it substantially to the immense value that could be unlocked from SBI’s stakes in NSE and Yes Bank. NSE is preparing for a mega IPO with SEBI preparing to clear it of all disputes that were obstacles to the much-awaited public issue.

The SBI scrip jumped 1.79% on Monday (June 30) and closed at Rs 819.85, rising Rs 14.45 during the day when both Sensex and Nifty ended 0.54% and 0.47% down respectively. The 12-month target price of Rs 1,050 set by CLSA signalled an upside of 28.07% compared to the price level of Monday. However, CLSA also stated that even setting aside its stakes in NSE and Yes Bank, the core business of the bank seems to justify its valuation and target.

CASA, low slippage ratio bright spots

Two of the core strengths of the SBI in recent years are steady gain of market share by the PSU bank for the fourth year on the trot both from PSU and private sector banks. Its CASA performance was faster than its peer institutions, underlined CLSA. CASA implies current account and savings account. It is an important metric in banking since it offers a low-cost source of funds for banks.

Moreover, the asset quality has remained strong. SBI has reported improvement in gross slippage ratio in the last financial year. Gross slippage ratio indicates the rate at which standard loans of a bank turn into NPA (non-performing assets). In simple words, how fast good loans are turning bad.

One of the weak points underscored by CLSA was an expected dip in margins of the bank in FY26. But the brokerage firm also stated that could substantially retain its loan market share in the next two years, delivering a 1 percent RoA and 14–15 percent RoE in FY27.

SBI’s upcoming qualified institutional placement (QIP) has triggered big participation by foreign players, reports have said. It has a size of Rs 25,000 crore and will be a record fund raising plan by the bank.

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