Multibagger Stock: PSU lender State Bank of India (SBI) is one of the top picks selected by brokerage house HDFC Securities for the upcoming year 2022. The brokerage believes that India’s largest bank is almost immune to any liability-side risk at the moment, due to its huge deposit base and majority stake of the government.
The domestic brokerage and research firm said in a note, “SBI is in a better position than many other large banks to address asset quality concerns because of the quality of its loan books. In addition, adequate provision coverage will reduce the incremental loan loss provisions.”
On the digitization front, its YONO app continues to generate strong traction across all metrics. In Q2FY22, 37% retail asset accounts and 58% savings accounts were opened through YONO. HDFC Securities said that among PSU banks, SBI continues to be the best player on a gradual recovery in the Indian economy with a healthy PCR, strong capitalization, a better asset quality outlook.
However, given the size and exposure of SBI, the increase in geographic reach by new private sector banks, macro-economic risk may be intensified by the expected decline in market share which could be major concerns. SBI shares have gained around 63% this year (Year-to-Date or YTD), while PSU Bank stock has given over 70% returns in a one-year period.
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