SBI share jumps 8% this week; here's what fuelled the rally

Shares of State Bank of India (SBI) looked pumped up this week, surging as much as 8% as compared to a 1.7% gain in the BSE Sensex and a 2.5% rise in BSE Bankex index, as investors are betting high on the country’s largest lender amid plan to raise capital through infrastructure bonds. The PSU bank in an exchange filing on Wednesday said the central board of its executive committee is scheduled to meet on January 3, 2023, for seeking approval to raise funds up to ₹10,000 crore via infrastructure bonds either through a public issue or private placement in the ongoing financial year 2022-23.

“A meeting of the Executive Committee of the Central Board of State Bank of India is scheduled to be held on January 3, 2023, to seek approval for raising of Infrastructure Bonds up to an amount of ₹10,000 crore through a public issue or private placement, during FY23,” the public sector bank said in a BSE filing on Wednesday.

Riding high on the fundraising plan, shares of SBI opened higher for the second straight session on Friday and gained as much as 1.3% to ₹620.5 on the BSE. The stock ended 1.8% higher at ₹612.30 in the previous session. In comparison, the 30-share Sensex was up 107 points at 61,240 levels, while the banking index, BSE Bankex, was trading flat with a marginal negative bias.

With a market capitalisation of ₹5.48 lakh crore, the banking heavyweight trades nearly 2% lower than its 52-week high of ₹629.65 touched on December 15, 2022. The banking stock touched its 52-week low of ₹425 on March 8, 2022. The share price of the banking major has gained 32% on a year-to-date (YTD) basis, while it surged 31% in the past six months and 2% in a month.  

Earlier this month, SBI raised ₹10,000 crore through its maiden infrastructure bond issuance at a coupon rate of 7.51%. This also marked the largest single infrastructure bond issued by any bank in the country. The lender intends to use the capital raised through bonds to enhance its long-term resources for funding infrastructure and the affordable housing segment.

For the second quarter of the current financial year (Q2 FY23), SBI posted record quarterly profit after tax (PAT) of ₹13,264.62 crore, up 74% year-on-year (YoY) from ₹7,626.57 in the year-ago period. The total income rose to ₹88,733.86 crore, up 14% from ₹77,689.09 crore in the corresponding quarter last year. On a consolidated basis, the bank posted a profit of ₹14,752 crore and became the most profitable company during the quarter under review, beating Reliance Industries having net earnings of ₹13,656 crore.

The net interest income stood at ₹35,183 crore, up 12.83% from ₹31,184 crore in the year-ago period. Domestic net interest margins (NIMs) improved 5 basis points on a YoY basis and 32 basis points on a QoQ basis to 3.55%.

On the asset quality front, gross non-performing assets (NPAs) declined to 3.52%, from 3.91% in Q1FY23 and 4.9% in Q2FY22. Similarly, net NPAs fell to 0.8% as against 1% and 1.52% in Q1 FY23 and Q2 FY22, respectively.

In the July-September quarter of 2022, the PSU lender reported credit growth at 19.93% YoY with domestic advances growing by 18.15% YoY. The foreign offices’ advances grew 30.14% on a yearly basis.