State Bank of India (SBI), the nation's largest lender by assets, has once again ascended the market capitalisation ladder, surpassing software giant Infosys. SBI's stock has surged by 20.5% in February, marking its best monthly return in three years. The last time such gains were witnessed was in February 2021, when it soared by 38.3%. Last week, the state-owned lender reclaimed the title of the most valuable PSU, overtaking LIC in market valuation, following a 10% dip in LIC's share price.
SBI's current market position
With a market valuation of Rs. 6.89 lakh crore, SBI now holds the fifth position, trailing Reliance Industries, Tata Consultancy Services (TCS), HDFC Bank, and ICICI Bank. Notably, banking entities dominate the list, with three out of the top five firms belonging to the sector. This indicated the increasing prominence of financial firms in the eyes of investors. As of Wednesday, Infosys held a market capitalisation of Rs. 6.87 lakh crore.
Top valuations in the market
Reliance Industries leads the valuation chart with a market capitalisation of approximately Rs. 20 lakh crore, followed by TCS with Rs. 14.4 lakh crore. HDFC Bank and ICICI Bank follow with Rs. 10.9 lakh crore and Rs. 7.4 lakh crore, respectively.
Financial performance and analyst outlook
In the quarter ended December 31, 2023, SBI reported lower-than-expected earnings due to one-time costs related to wage settlement. Despite this, the bank managed its net interest margin (NIMs) well and exhibited some improvement in asset quality. Jefferies, maintaining a buy rating on SBI with a 12-month target price of Rs. 810, believes that while fresh nonperforming loan (NPL) formation has increased by 57% YoY, the accretion level remains relatively low. The bank's Gross NPL ratio of 2.4% is low across segments, with a high coverage ratio of 74%.
Market performance comparison
Over the last six months, SBI's shares have generated a return of 35%, surpassing Infosys, which gained 18%. Meanwhile, the benchmark Nifty50 yielded a return of 14% during the same period.
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