CLSA, Bernstein, Nomura, Morgan Stanley (MS), HSBC, and Macquarie have all issued their latest research reports on State Bank of India (SBI) and Bharti Airtel.
CLSA has an Outperform rating on SBI with a target price of Rs1,050 per share. The report highlights the good performance on asset quality but notes that net interest margins (NIM) have been compressed. Loan growth has moderated in line with the system, and there was a decline in NIM, which was slightly disappointing. However, asset quality remains intact. Deposit growth of 10% was deemed not bad but uninspiring by CLSA. Management targets 10-11% year-on-year deposit growth in FY25, having lowered the target from 11-12% in Q2FY25.
On the other hand, Bernstein has a Market Perform rating on SBI with a target price of Rs900 per share. The report mentions that margin pressure has driven down return on assets (RoA) to 1% despite stable asset quality. Loan growth was healthy at 14%, while deposit growth remained weak and driven by term deposits. Asset quality has improved further, though NIM has declined and net operating income (NOI) has normalized.
Nomura has a Buy rating on SBI with a target price of Rs1,000 per share. The report describes the quarter as mixed, with soft NIMs, robust loan growth, and asset quality. The outlook for return on equity (RoE) is strong, and valuations are considered attractive. Soft NIMs and fee income led to a core pre-provision operating profit (PPoP) miss, but lower credit costs aided profit after tax (PAT).
HSBC, with a Hold rating on SBI, has cut its target price to Rs800 from Rs880 per share. The report indicates a miss on loan growth, NIMs, and cost ratios in Q3. Asset quality performance was healthy, but EPS growth over FY25-27 is expected to be muted due to continued NIM pressure. The bank has also cut EPS estimates for FY25-27 by 1.5-5.2%.
Macquarie, however, has an Underperform rating on SBI with a target price of Rs700. The report notes a reduction in NIM guidance and expects credit costs to increase due to upcoming Expected Credit Loss (ECL) norms and normalization of recoveries.
Turning to Bharti Airtel, CLSA has an Outperform rating with a target price of Rs1,860 per share. The report highlights a strong performance in Q3, with India mobile revenue/EBITDA up 21%-30% year-on-year and consolidation in Indus. Average revenue per user (ARPU) increased 5% quarter-on-quarter and 18% year-on-year, now 21% higher than that of Reliance Jio. Bharti even gained 4.9 million subscribers compared to a loss of 2.9 million in the previous quarter. Consolidated free cash flow after leases and capital expenditure was strong.
UBS has a Neutral rating on Airtel with a target price of Rs1,705. The report describes the results as largely in-line, with outperformance versus Jio. Home broadband and enterprise segments were slightly ahead and below estimates, respectively. India mobile revenues were in line with expectations, and Airtel added 6.5 million 4G subscribers with strong postpaid net adds.
HSBC has a Buy rating on Bharti Airtel with a target price of Rs1,940 per share, citing intact growth levers. These include rising mobile ARPU, expanding home broadband subscribers, rising free cash flow, and growth in dividends.
MS maintains an Equal-weight rating on Airtel with a target price of Rs1,650. The report notes that India business revenue (excluding passive infrastructure) was in line with estimates, while EBITDA beat expectations by 2%. Net debt in India (excluding lease liabilities and Indus Towers) narrowed by almost $1 billion quarter-on-quarter, reflecting solid free cash flow generation in Q3FY25. Steady growth in subscribers, ARPU in the India mobile business, and sharp margin improvement were also highlighted.
