While SBI always had the natural advantage of brand recognition and scale, the bank has gradually added other competitive moats in the form of a prolific sourcing edge, a YONO-powered digital stack, an unparalleled lean distribution model, and a potent combination of cross-sell focus and competencies

Given healthy growth prospects and consistent asset quality, we maintain BUY for an unchanged TP of Rs 729, based on 1.3x FY25E ABV (Gordon Growth Model) and adding in Rs 166/sh for subsidiaries

We expect NIM trajectory to sustain with repricing of lending book offsetting any deposit cost rise. Credit growth of 18% / 16%, stable NIMs, operating profit growth of 22% / 19% and credit cost of 0.8% / 0.9% will drive RoE to 18%/ 17% by FY23E/FY24E, respectively. This will help SBI command 1.7x FY24E core banking business book (earlier 1.5x Sep’23E). We revise our SoTPbased target price to Rs 805 (earlier: Rs 673)

SBI has set new standard in banking excellence: SBI exited FY22 with 13.9% RoE and 0.67% RoA aided by growth build-up, GNPAs at a decadal low, slippages at <1%, credit cost at 55bps and steady margin profile. Improved visibility on asset quality with ‘new normal’ credit cost of 1%, credit growth of 13%/15% for FY23E/FY24E, asset resolution and stable NIMs will drive RoE to >16% by FY23E/FY24E and valuations to 1.5x Sep’23E book. Maintain BUY with an unchanged target price of Rs673.