Mumbai: Shares of State Bank of India (SBI) gained nearly 1% in early trade on Thursday as the much-awaited National Stock Exchange (NSE) IPO opened for public subscription. The stock rose as much as 0.95% to ₹1,000.90 on the NSE.
The movement in SBI shares came as investors tracked the bank’s business outlook as well as its role as the largest selling shareholder in the NSE IPO. SBI is offering around 1.59 crore NSE shares through the offer for sale (OFS), which could fetch the bank around ₹2,851 crore at the upper end of the ₹1,785 price band.
Jefferies sees 13–15% loan growth
Global brokerage Jefferies expects SBI’s focus on operating efficiency and growth in selected businesses to support loan growth of around 13–15%.
The areas being targeted by the bank include loans to self-employed customers and professionals, retail current account deposits and wealth management. SBI is also focusing on increasing cross-selling opportunities and expanding its digital capabilities.
According to Jefferies, these initiatives could support a return on equity (ROE) of more than 15% and a return on assets (ROA) of above 1%.
ROE and ROA are two commonly used measures to assess a bank’s profitability. ROE measures the profit generated from shareholders’ equity. An ROE of 15% broadly means a company generates ₹15 in profit for every ₹100 of shareholders’ equity.
ROA, meanwhile, measures how efficiently a bank generates profit from its overall assets. An ROA of 1% means the bank generates roughly ₹1 of profit for every ₹100 of assets.
Loan growth, on the other hand, shows how quickly the bank’s lending business is expanding. A 13–15% loan-growth outlook indicates the potential pace at which SBI’s loan book could increase, according to the brokerage’s assessment.
SBI’s role in NSE IPO
The NSE IPO is entirely an OFS, meaning NSE is not issuing new shares and will not receive the IPO proceeds. Existing shareholders are selling their holdings as part of the public issue. The IPO has a price band of ₹1,700–₹1,785 per share and will remain open from September 17 to September 21.
SBI is the largest selling shareholder in the NSE IPO, offering up to 1.59 crore shares. SBI Capital Markets is separately selling around 87.8 lakh shares. At the upper price band, SBI Capital Markets’ stake sale is worth approximately ₹1,567 crore.
The NSE IPO has an overall issue size of about ₹22,561.5 crore at the upper end of the price band. The exchange is offering up to 12.64 crore shares through the OFS.
FCNR deposits and lending outlook
SBI Chairman C S Setty recently said the bank would deploy funds raised through the Reserve Bank of India’s special concessional swap window for FCNR(B) deposits over a period of around three to four months.
The comments came amid discussions around how the additional foreign currency deposits could affect lending growth. Setty said the funds would be deployed over time and that banks would remain responsible in their deployment.
He also indicated that he did not expect the RBI’s six-member Monetary Policy Committee to raise interest rates at its October policy review.
For SBI, the combination of loan growth, operating efficiency and profitability remains an important focus as investors track the bank’s performance. The NSE IPO has added another near-term market focus because of SBI’s position among the exchange’s selling shareholders.
Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation. Securities and IPO investments are subject to market risks. Investors should conduct their own research before investing.
