SBI share price: Can SBI be a Rs 1,000 stock in the next 3 years? Amnish Aggarwal Responds

“I would still be a bit cautious as these are just one quarter numbers. I wouldn’t rule out that like in the case of Blinkit, all the losses are increasing because it’s a competitive space and it’s evolving” , declares Amnish AgarwalHead of Research, Prabhudas Lilladher.

What is your hierarchy in the banks? Do you choose PSU banks rather than private sector banks?
We were overweight and positive on the banking space, but we are more limited to private sector banks, being the only PSU bank we have recommended. As for the other PSU banks, some of them have posted reasonably good numbers and many of them are available at a reasonable price compared to book values, but a lot depends on how they scale higher, how the growth rate is maintained. If you just want to play value, some of these stocks might have value, but the private sector banks are where the stock is and they will continue to share for the long haul.

Maybe a stock of Rs 1,000 in the next three years? Am I conservative or aggressive?
State Bank of India like many other banks through their subsidiaries or affiliates offer virtually full gamut of services for example after a while your SBI mutual fund will be listed you have already

. The type of distribution they have is far superior to any other bank in the country. The problem in the past has been the NPA and a lower growth rate than private sector banks. Now, if SBI’s balance sheet is in much better shape and the resumption of growth occurs, can the State Bank of India reach 1.5 to 1.7 times the price to record? It is practically possible. But Rs 1,000 over a two year period is something we don’t visualize at this point.

Your perspective on the overall outlook as it relates to Zomato now that we have news regarding Uber Tech looking to sell a stake in the company after the kind of results the company has had the phenomenal reaction also on the share price ?
Zomato showed what people call Adjusted EBITDA, which excludes your ESOP expenses and some of the other expenses. But the industry as such has only two players. It has to evolve over a period of time and secondly the recent acquisition of Blinkit is also an issue. I think this space is quite competitive. Now even Bigbasket has entered the space and any correction in the stock has to do with a bit of reassurance that overall losses will diminish, they could be positive for EBITDA in the medium term. Moreover, the stock has corrected significantly from Rs 160 to below Rs 50. I would still be a bit cautious about this as these are just one quarter figures. I don’t rule out that, as in the case of Blinkit, all the losses will increase because it is a competitive space and it evolves. The stock offers value, but there could be many ups and downs as we move forward.

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Is this a very mixed view when it comes to large and mid cap stocks? Do you stick to the top names or is there a lot of potential even in the midcaps?
Mid-cap IT stocks have done very well over the past two years. The gap between the multiples of largecaps and midcaps has narrowed, but that said. The kind of situation we find ourselves in, where margins are under pressure, PE multiples are contracting and there is fear of some kind of slowdown in US markets. We’d be more comfortable sticking with the big names, whether it’s LTI or even a niche company like LTTS.

If truck sales are bigger and if diesel sales are bigger, I guess logistics is a good deal to do now?
Over the past two or three years, the logistics industry has come a long way. If you combine the whole ecosystem, the data point you share is that truck sales go up and diesel sales go up. All of this indicates that economic activity is normal. As India has successfully circumvented the fourth wave, in the coming festival season all logistics activity across the economy is expected to improve.

Now, whether it’s due to e-commerce or something else, logistics companies in terms of volumes will do just fine. Now that crude prices are in a more comfortable zone than they were a few months ago, logistics companies should have a solid year ahead of them.

Karen J. Nelson