SBI Surges to Join Indian Companies with Rs 8 Lakh Crore Market Cap

State Bank of India, a state-run lender, has achieved the milestone of becoming the seventh Indian listed company to exceed a market capitalisation of ₹8 lakh crore. On June 3, SBI's shares reached a new all-time high of ₹900.15 on the BSE, climbing as much as 8.3% during the morning trade. This marks the bank's best trading day since September 2021. The share prices have surged by over 40% year-to-date.

India's largest public sector bank reached a significant milestone today as its market capitalisation surpassed ₹8 trillion for the first time. This achievement came after its share price surged by 8.4%, reaching a new high of ₹899.55 on the BSE during intraday trading. The ongoing rally, fueled by exit polls forecasting a landslide victory for the BJP-led NDA government, saw SBI Share Price increase by 8.2% to ₹898.45 on the BSE at 11:58 AM, resulting in a market cap of ₹8.02 trillion. Meanwhile, the S&P BSE Sensex rose by 3.1% to 76,279.

Following the release of exit polls after the final phase of elections on Saturday, investor sentiment towards PSU bank counters turned optimistic, driving them into positive territory.

Previously, Reliance Industries, Tata Consultancy Services, HDFC Bank, Bharti Airtel, Infosys, and ICICI Bank have all attained this milestone.

SBI shares are climbing along with other public sector unit (PSU) stocks following exit polls on June 1, which predicted a decisive victory for the BJP-led NDA. These polls suggested that Prime Minister Modi’s government would win over 350 Lok Sabha seats, exceeding the optimistic projections of many brokerage firms. Stocks benefiting from the government’s growth initiatives, particularly those involved in capital expenditure or within the public sector, have experienced significant increases over the past year and are expected to continue their upward trajectory, according to market experts.

Analysts at Nomura forecast that a continued emphasis on capital expenditure and fiscal consolidation could result in domestic sectors, particularly infrastructure and manufacturing, outperforming in the near future.

"The victory of PM Modi/BJP augurs well. Fundamentally, for the economy and capital markets, India is witnessing its own mini-Goldilocks moment. Our model portfolio remains aligned with the key domestic cyclical themes. We remain overweight on financials, consumption, industrials, real estate, and PSU banks," stated domestic brokerage firm Motilal Oswal.

The brokerage reaffirmed its 'buy' recommendation on SBI's stock following the bank's Q4 results and has set a target price of ₹925 apiece. SBI has demonstrated a remarkable turnaround in earnings, transitioning from a loss of ₹65 billion in FY18 to profits of ₹611 billion in FY24.

"Healthy business growth despite size along with stable margins and asset quality likely to provide further potential for improved performance. We expect stable NIM at 3% and RoA/RoE of 1.1%/17% by FY26. We broadly maintain our growth estimate due to strong performances across segments", BoB Cap said in its latest note on State Bank of India.

Recently, SBI reported a net profit of ₹20,698 crore for the fourth quarter of FY24, marking a 24% increase from ₹16,694.5 crore in the same quarter the previous year. The public sector lender's net interest income (NII) in Q4FY24 saw a slight rise of 3.1%, reaching ₹41,656 crore compared to ₹40,392.5 crore year-on-year (YoY). The bank's asset quality improved during the March quarter, with Gross NPA decreasing by 2.9% and Net NPA declining by 6.1% quarter-on-quarter (QoQ).